Bidding opens for 3G mobile licences

European telecom operators have embarked on the first stage of Europe's first radio spectrum auction for third generation mobile licences.

Telcos have registered their bids with the UK Radiocommunications Agency, and all five licences available each have a set reserve price. All applicants must pay a deposit of £50m.

The largest licence has a price tag of £125m and bidding is only open to new entrants. However, the remaining four vary in size and price and are open to incumbents and entrants.

BT Cellnet, One2One, Orange and Vodafone AirTouch are all expected to bid, with speculation rife that Virgin and NTL could bid as well.

Val Jervis, principal consultant at Netcom Consultants, said: "It is likely that any European operator will bid, and those without a presence in the UK are likely to team up with another company. Virgin might pre-qualify but whether they go in on their own or with another telco is unknown."

Telefonica and France Telecom are expected to put in an appearance.

Marie Wold, manager at Deloitte & Touche, said there is a lot of European interest because the UK's approach differs so greatly from other European countries. In Finland and Spain licence allocation was based on a so-called 'beauty contest' where applicants are judged on merits, often leading to licences being awarded on political grounds.

Henry Harrison, principal consultant at Schema, said: "In an age where the scramble for consolidation through mergers and acquisitions is frantic, it is clear that there are many advantages to being a true pan-European operator. Pan-European services will result in very competitive prices, and will also relieve problems surrounding roaming and roaming tariffs."