At least six contenders are expected to bid for five Universal Mobile Telecommunications System (UMTS) licenses in Italy, each expected to cost between 3 and 4 billion euros ($2.69 and $3.59 billion), business analysts said Wednesday.
Bid presentations must be made to the Italian Ministry of Communications by noon Thursday (10:00 GMT).
By September 2 bidders will be given the green light to proceed to the next round or face elimination, according to ministry officials.
The Italian government expects to make less money on their auction than the 50.5 billion euros ($45.3 million ) in licenses sold by the German government's UMTS auction earlier in August, said Michele Lauria, the Italian state secretary.
Expert estimates place the price of the UMTS in Italy between $3 and $4 billion (between 3.3 and 4.5 billion euros) and expect the government to make between $15 and $20 billion (16.7 and 22.3 billion euros) from the auction of the five licenses.
Tim and Omnitel, the two largest mobile telephone operators on the Italian market, already submitted their applications Wednesday for the licenses, which are expected to be officially assigned to winners in December and will cover a bandwidth of 10 megahertz.
The four other competitors are Wind and Blu, two companies already active in the mobile telephone market, and the consortia Andala and IPSE.
Andala includes Hutchison Whampoa Ltd, holding a 51 percent stake, Tiscali SpA with 25.5 percent and Compagnie Industriali Riunite with 15 percent.
IPSE is led by Spanish telecommunications giant Telefonica SA, which holds 30 percent.
The definitive make-up of IPSE's shareholders will not be known before September 11 — the deadline to present the bidders' final business plans to the communication ministry — but it is known that Finnish operator Sonera Group PLC, Spanish-Italian operator Atlanet and Banca di Roma SpA each hold 19 percent.
After September 11, no firm timescale has been set for the rest of the auction, but bidding is expected to begin around the beginning of October and winners are due to be declared around the beginning of November, Italian communication ministry officials said.
The minimum bid has been set at 4 trillion lire (2.065 billion euros, $1.851 billion).
Bidders need to make a deposit of 5 billion lire (2.58 million euros, $2.31 million) to be able to apply and will be allowed to raise their bids by a minimum of five percent for the first 10 increases and then by a minimum of two percent for any further hikes.
The competition is straining the pockets of some competitors. Shares of Telefonica SA for example fell in a negative response to the UTMS bidding, stock traders reported.
A plan to borrow up to 8 billion euros ($7.2 billion ) as a bridge loan to pay for the licenses was expected, but will weigh on the group's credit worthiness, currently considered for a downgrade by Moody's, the dealers said.
If only five or less competitors presented their bids, the government would remove licenses to keep the number of bidders higher than the number of available licenses.
Business analysts, taking into account the minimum bids and minimum levels for bid increases, expect the Italian auction to be shorter and with fewer rounds than the German auction. — (AFP)
© Agence France Presse 2000
© 2000 Mena Report (www.menareport.com)
