Spanish Grasp Italian Lifeline
According to the government Website Governo Italiano, Italy’s cabinet has approved measures to allow third-generation mobile license owners to sell UMTS (Universal Mobile Telecommunications System) frequency to rival carriers.
“Trading of frequencies is being introduced. That is to say, operators may sell on the market frequencies assigned to them to other operators,” says a statement on the site.
Previous attempts to carry out spectrum trading in Sweden and Norway were squelched by governments demanding the return of the unused licences for re-auction.
The move will allow Telefònica Mòviles to negotiate the sale of its 5MHz Italian UMTS spectrum to rival regional carriers Telecom Italia Mobile SpA (Milan: TIM) and Vodafone Omnitel, aiding its escape from a €6.49 billion (US$7.37 billion) debt pile accrued with the purchase of licences in Switzerland, Germany, Italy, and Austria (see Telefònica Plots 3G Escape).
According to media reports, the carrier has invested €1.49 billion ($1.69 billion) in the Italian venture.
Analysts welcome the turnaround in regulatory approval but point out the relatively low return on expenditure the carrier may receive.
“This is great news for Telefònica as it can get some of its cash back from its several failed UMTS investments,” comments Bena Roberts, European wireless services analyst at Current Analysis. “I doubt though it would receive the original price that it paid for the license in the first place.”
“Given the amount of investment these guys have put in -- the licences, getting the teams in place, creating the company, installing some of the infrastructure -- they are unlikely to get all the money back,” agrees IDC senior analyst Paolo Pescatore.
UMTS is a third-generation upgrade for existing General System for Mobile (GSM) networks, that uses a Wideband CDMA (WCDMA) air interface to increase the data rate offered over the wide-area network to a theoretical maximum of 2 Mbit/s.
A spokesman for Telefònica Mòviles declined to offer comment.
— Justin Springham, Senior Editor, Europe, Unstrung