Eircom will join bidding for wireless licences

Eircom will compete in a series of auctions for broadband fixed wireless access licences in Northern Ireland and at least two other regions in the UK, The Irish Times has learned.

The company will submit its initial application to the Radiocommunications Agency in the UK tomorrow and expects to be cleared later this month to compete in the October auctions.

The wireless licences enable companies to provide fast Internet and multimedia access by radio links instead of a telephone line and are available in 14 UK regions. Each licence will last 15 years and carries "use-it-or-lose-it" obligations to ensure services are rolled out on time. It is understood Eircom is most interested in securing licences in Northern Ireland, London and Manchester to expand its presence in these areas.

A source close to the company said it planned to build a wireless distribution network to link into its existing broadband network in these three cities.

"It would be a perfect fit for the company," the source added. The licences for London and the greater Manchester area have been allocated the highest reserve prices of £4 million sterling (€6.5 million) and £3 million sterling respectively. While the Northern Ireland licence has a reserve price of only £100,000.

Auction prices for the licences are difficult to predict, but are unlikely to get close to the £1 billion-plus mark at which point Eircom bowed out of the auction for third generation mobile licence in the UK.

It is understood Mr Chris Kinghan, chief executive of Eircom Northern Ireland, will lead the same team which made Eircom's failed bid for a UMTS licence in the UK earlier this year.

A successful move by Eircom into the UK wireless broadband market may go some way to relieve the pressure on the company which has been severely criticised for not expanding its operations internationally.

Since its failed bid to gain a third generation licence in the UK, the Eircom share price has slumped to record lows. Last week it hit €2.35.

If Eircom secured a licence in Northern Ireland it would be able to offer an all-Ireland broadband wireless network by utilising a similar licence which it was awarded in the Republic.

Eircom will face competition from Princes Holdings and Formus Communications in the Northern Ireland region. However, Esat Telecom, which holds a similar licence in the Republic, will not compete for a licence. It is likely its parent company, British Telecom, will enter the auctions.

Eircom shares closed up nine cents at €2.55 yesterday as sentiment towards technology stocks remained relatively strong.

The company's senior executives have been strongly criticised over their remuneration packages and are set to face an angry shareholders' meeting this month when the issue will dominate the former semi-state company's a.g.m.