BBC News Online: Business

Germany hopes for mobile riches

The government hopes for a massive windfall from the auction. Experts estimate that mobile phone companies could be prepared to pay as much as 60bn euros ($55bn, £35bn) for the five licences on offer.

A similar auction in the UK recently yielded £22.5bn ($35.2bn) for the British treasury.

Third generation mobile phones will allow users wireless access to the internet.

Phones, watches and other handheld devices are expected to be powerful enough to show video on demand.

The firms in the running for Germany's third generation licences are:

• Deutsche Telekom
• Vodafone AirTouch's Mannesmann
• E-Plus
• Mobilcom, backed by France Telecom
• Debitel
• Viag Interkom
• Vivendi
• MCI-Worldcom
• Group3G, comprising Orange, Telefonica and Sonera
• Nets AG
• Talkline
• Auditorium Investments

Deutsche Telekom, Mannesmann/Vodafone, VIAG and E-Plus are already running digital mobile phone networks in Germany.

Not all mobile phone licences can command such high bid prices, though.

On Tuesday all bidders dropped out of the auction in Turkey for a new digital (second generation) mobile phone licence.

The telecom firms, including US company SBC, Spain's Telefonica, France Telecom and Norway's Telenor, were worried that the starting price of $2.525bn was too high.

The market is already dominated by two operators, with a third company due to enter the market soon.