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Thursday, 19 October, 2000, 13:09 GMT 14:09 UK
Italian mobile auction begins
Man dials on a mobile phone
Blu shareholders are still arguing over the licence cost
Six international telecoms groups turned up as expected for the start of Italy's auction of five third-generation mobile phone licences.

The auction had been due to get underway at the Communications Ministry at 1200 GMT.

Similar auctions earlier this year in the UK and Germany generated billions of dollars more than expected for government coffers.

Analysts predicted that the Italian auction would raise about $24.5bn for the state.

The bidders are expected to include Italy's four existing mobile network operators and two prospective new entrants to the market.

Blu talks

Late on Thursday morning, shareholders in Blu - one of the existing operators - were still stuck in a marathon meeting, deciding whether they would participate in the auction.

But with only a few minutes to go before the auction's scheduled start, the company said its shareholders had agreed unanimously to proceed.

The meeting, which had begun on Wednesday evening, was called in an attempt to resolve a dispute over the company's ownership structure and the likely cost of the new licences.

Some shareholders - including the Italian motorway group Autostrade which has a 32% stake - were thought to be unwilling to pay the high sum that will be necessary to win a new licence.

And the group's only telecoms company, British Telecom, was believed to be reluctant to raise its 20% stake by as much as some other shareholders would like.

The licence timetable
19 October, auction begins
1 January 2002, 15-year duration of licences begins
30 June 2004, deadline for extending coverage to Italy's 21 regional capitals
1 January 2006, end of 48-month period in which operators are prevented from selling licences on to third parties
1 January 2007, deadline for extending coverage to provincial capitals
31 December 2016, licences expire.
Despite the apparent differences among shareholders, analysts had said Blu was unlikely to exit the licence race before the auction began since it would mean losing a 4,000bn lire ($1.74bn) deposit that was refundable if the company entered and then dropped out of bidding.

The three other existing operators, who are all expected to win new licences, are Telecom Italia Mobile, Omnitel - a consortium led by the UK's Vodafone - and Wind, a joint venture of Italian utility Enel and France Telecom.

The other expected bidders are Andala - a consortium headed by Hong Kong-based Hutchison Whampoa - and IPSE, led by Spain's Telefonica.

Analysts are divided on which of these two groups will emerge successful, assuming the existing operators all clinch new licences.

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See also:

17 Oct 00 | Business
Threat to BT Italy deal
17 Aug 00 | Business
German phone auction bonanza
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