UMTS: FRANCE MAY REDUCE COST OF LICENCES.

The French Government decided last year to allocate four UMTS licences by June 2001 at the latest for 15 years at a unit price of Euro 4.95 billion, making a total of Euro 19.8 billion. However, following the double withdrawal of Suez Lyonnaise-Telefonica and Bouygues Telecom, both of which deemed the entry price too high, only France's leading two mobile telecoms groups, France Telecom/Orange and SFR/Cegetel (Vivendi Universal) remained in the race. The French Government is therefore able at present to award only two licences. Echoing a call from the Telecommunications Regulatory Authority (ART), Economic Affairs Minister Laurent Fabius has pledged to launch an additional call for the final two licences. On 1 February, Secretary of State for Industry Christian Pierret indicated to the Senate that several parameters may come into play in a second call to be launched in a few months time: duration (of licences), price and time-frames. He reiterated the maintenance of objectives for UMTS, notably the desire not to sell off public property on the cheap. However, the Government has for the first time raised the possibility of using the previously taboo parameter of price.The question of price is crucial for the timetable and final outcome of the procedure. The Government laid down the price of UMTS licences in Spring 2000, following the lucrative auction in the United Kingdom which brought in Euro 38.5 billion, and at a time of stock market euphoria over telecoms shares. This speculative bubble has since burst, but the...