Eircom to bid at auction for mobile phone licences in UK

Eircom is one of 13 telecoms groups which have applied to take part in an auction of five high-tech new generation mobile phone licences in Britain, worth in excess of £2 billion. If successful, the move would mark the recently privatised company's first major move into an overseas market.

Eircom signalled its intention to bid yesterday, along with telecoms industry giants such as Vodafone Airtouch, BT Cellnet, Orange and MCI WorldCom, the giant US-based carrier which also operates in the Republic. Applicants, including Eircom, had to put up a £50 million refundable deposit to join the auction, which takes place in March. The British government has set a reserve of £500 million in total for the five licences. However, it is expected that the licences could cost £300-£500 million each and some analysts say the total amount raised could be as much as £2 billion.

The new licences, known as Universal Mobile Telecommunications Systems, (UMTS) will enable operators to offer a far wider range of services than they can now. These will enable mobile phones to make calls, receive faxes and remain on office networks simultaneously. They will also be able to download pictures and music, and data will be transmitted at speeds up to 200 times faster than currently available.

It is also expected that there will be huge migration from the current GSM or second-generation operators by customers who want the faster, more efficient networks. Building out a system could cost up to £2 billion over 10 years and the first products are expected to be available from 2002.

An Eircom spokesman said the company had made the initial application yesterday. He said Eircom would make a final decision on whether to put in a formal bid in the coming weeks, "but it is our intention to bid", he said. The licences are expected to be awarded in June, but the size of the final bids are expected to remain confidential. Eircom is bidding through a company it established called 3G (UK) Ltd.

Others who submitted an initial bid include cable group NTL, which paid £535 million for Cablelink last year, SpectrumCo Ltd (a consortium led by Sir Richard Branson's Virgin Group), Telefonica of Spain and Crescent Wireless, whose shareholders have interests in Global Crossing.

The largest spectrum will be reserved for a new entrant, who will initially be allowed to use the networks of Britain's four existing national operators while it builds out its own one.

Sources said last night that the Republic is still at least one year away from establishing its own UMTS auction. UMTS operates on a higher frequency than current mobile phone systems.