Race for UMTS Licenses in its Third Week

[Berlin, GERMANY] The race for the UMTS mobile radio licenses entered its
third week of
auctioning this morning. The highest bids for all twelve frequency packages
has risen to
DM 66.7 billion (US $33.88 billion) after the 130th round of auctioning. On
Friday, the participants went into the weekend at DM 65 billion (US $30.09
billion). Leading the bidders this morning was
Mannesmann Mobilfunk with its bid of approximately DM 17 billion (US $7.87
billion) for three
frequency blocks. Experts predict that a decision will be made this week
awarding the UMTS licenses. Four to six licenses will be awarded depending
on bidder conduct.

In Mainz, a total of six applicants are still in the running at the auction.
On Friday evening after the 127 round, the Swisscom subsidiary, debitel,
dropped out of the bidding. According to the operator, high costs formed the
basis for this decision. In Stuttgart, debitel announced its plan to
massively step up investments in order to acquire more customers.
Nevertheless, the
company expects to be able to offer UMTS services in cooperation with future

According to a report by the newspaper Bild, Federal Chancellor Gerhard
Schrvder supports Finance Minister Hans Eichel’s plan to earmark the UMTS
proceeds exclusively to the banks to satisfy national debt. According to
Schrvder, there will be nothing to distribute. At best, the interest
saved could be invested in transportation.

The news magazine, Focus, reported that the mobile radio companies could
write off the license costs for 20 years after start-up, thereby reducing
the profit statement. According to Focus, with license costs of up to DM 20
billion (US $9.3 billion), DM 1 billion (US $0.46 billion) could be
written off annually.

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