Optical/IP Networks

Europe's 3G License Giveaway

Anyone fancy a next-generation mobile license gratis? Only a few strings attached?

Thought not.

There was a time when a 3G license in Europe attracted bids of billions of dollars, notably in Germany and the U.K. (see Next-Gen Rollout Survey). While these countries held high-profile auctions that are now causing the license-holders some financial angst, others decided to have beauty contests and pretty much give the licenses away, an example being Finland in March 1999.

More than three years on, and the Finns are set to do the same again -- hold a beauty contest for the 3G license that Telia AB will hand back to Finland's Ministry of Transport and Communications, once the Swedish operator completes its merger with fellow 3G license-holder Sonera Corp. (Nasdaq: SNRA) (see Sonera/Telia Merger Delayed). EC regulations are forcing Telia to divest itself of its mobile holdings in Finland (see Finnish 3G License for Sale).

"Once the merger happens, the license will be returned to us and applications will be sought from companies" wishing to take on the license, says the ministry's Katarinna Kivisto.

The main difference between 1999 and now is likely to be the number of applicants. An impressive 12 companies put themselves forward for the initial award of four licenses. Unstrung will eat its various and sundry hats if anything like as many companies pitch in next time around. The ministry will be lucky to get any interested parties at all, given the cost of building a network and the headstart the remaining three 3G operators (Sonera, Suomen 2G Oy, and Radiolinja Oy) already have.

In Cyprus, meanwhile, it's a case of "Buy one, get one free." The island's Ministry of Communications and Works is set to auction a GSM license later this year to introduce a competitor to incumbent CYTA. The winner of that license, in which only Greek national operator Cosmote has so far shown any interest, gets a 3G license thrown in for nowt if it builds and operates a 3G network within 10 years. CYTA will be the only other 3G license holder.

Given that the island (the southern Republic, not including the northern part governed by Turkey) has fewer than 700,000 residents (current mobile penetration of about 65 percent, all signed up with CYTA), the main attraction to have both licenses would be the 2.5 million holidaymakers that visit the island each year -- many armed with their mobiles, of course.

The offer comes as Europe's 3G woes stack up, the latest being the admission by Tele2 that it won't make its network buildout deadline in Norway (1,673 base stations by December 1). Also recently, Orange SA (London: OGE) has asked for an extension for its 3G network construction in Sweden (see Orange Squeezed in Sweden); and Group 3G, the German joint venture of Sonera and Telefónica Móviles SA, called it quits and mothballed its license, having figured it was pouring money down a very deep drain (see German 3G Player Folds).

Group 3G is now in discussions with the vendors (Nortel Networks Corp. [NYSE/Toronto: NT] and Ericsson AB [Nasdaq: ERICY]) that were supplying the equipment for its not yet built network, but at least it was still in the planning stages and had hardly begun construction (see German Fallout Hits Vendors). But what of Telia's network in Finland, being built with kit supplied by Nokia Corp. (NYSE: NOK) and Siemens AG (NYSE: SI; Frankfurt: SIE)?

"That is for sale, along with the rest of Telia's mobile business in Finland," says Vilhelmiina Kojo of Telia Mobile Finland. "Some network test areas have been built, mainly in Helsinki, but they are not very large. The main network construction has still to be done."

Now there's something to keep an eye out for on eBay.

— Ray Le Maistre, European Editor, Unstrung

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