France goes for merit, not money, in licence sale

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France will award four third generation mobile phone licences on merit, rather than price, but participants will also have to pay an entrance fee.

The system, while avoiding a costly bidding war between telecom players, has been condemned as too expensive by the two leading French telecoms companies.   A France Telecom spokesman said that the price was very worrying, and higher than they had anticipated.

But French Finance Minister Laurent Fabius rejected the accusation, saying that it was still a good deal for the French taxpayer, and that there should be no question of selling off public assets at cut-price levels.

The stakes are high in this war, and telecoms company Vivendi is prepared to sell some of its shares in BSkyB for the sake of getting a license. Bouygues Telecom is also keen to take part in the contest.

Each licence will cost 32.5bn French francs (£3.1bn), which will raise 130bn francs (£12.47bn) for the government, as opposed to the £22.47bn the UK Treasury made from its auction earlier this year. A list of criteria for the deal, which has been decried as a ‘beauty contest’, will be published by the end of June, and licences will be granted in the first half of 2001.

Fabius said that customers should be able to benefit from the new technology at the best price, regardless of their location and resources. And telecommunications companies “should be able to develop this technology while respecting competition,” he said.

Third generation mobile phones allow broadband services, for high-speed data transmission and provides internet and video links.

Suez Lyonnaise, the communications group, is to bid jointly with Spain’s Telefonica, and Deutsche Telekom has also expressed its interest. Germany’s service will come on the market next year.

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