* Auction raises 2.01 bln eur, 4 times minimum target
* T. Austria pays 1.03 bln eur, T-Mo 654 mln, H3G 330 mln
* Telekom Austria says looking at options for new debt
(Adds confirmation, details from regulator, comments from
By Georgina Prodhan
VIENNA, Oct 21 Austria raised 2.01 billion euros
($2.75 billion) in an auction for fourth-generation telecoms
frequencies which was among the costliest in Europe to date and
totalled almost four times the amount targeted.
The telecoms watchdog said on Monday Telekom Austria
paid 1.03 billion euros for 14 frequency blocks,
Deutsche Telekom's T-Mobile 654 million for 9 blocks
and Hutchison Whampoa's H3G 330 million for five.
The price paid by the operators for 4G spectrum, essential
to build new, faster networks and maintain market share,
approached prices paid in much larger European countries and
equalled the highest per capita so far.
Reuters reported last month that bids had reached around 2
billion euros in the auction, which began on Sept. 9 and had
targeted at least 526 million.
Telekom Austria said it would finance the auction
through existing cash and new debt, and said it was evaluating
several options for raising this. It had been expected to
consider a capital increase to protect its credit rating.
All three operators - no new fourth carrier emerged to take
advantage of a discounted offer - complained of the high cost,
achieved through an auction method designed to maximise
uncertainty about rivals' bids and minimise possible collusion.
"These exorbitantly high licence fees are depriving
operators of the means they urgently need to build out
networks," T-Mobile Austria Chief Executive Andreas Bierwirth
said in a statement.
Antonios Drossos, managing partner of Finnish telecoms
consultancy Rewheel, said the proceeds were even higher per
capita than in the Netherlands, where KPN was forced to
scrap its dividend after the frequency auction.
The Dutch auction raised 3.8 billion euros, and similar
auctions have netted 4.4 billion euros in Germany, 3.6 billion
in France and 2.34 billion pounds ($3.8 billion) in Britain.
Austria, with a population of 8.4 million, is Europe's most
competitive mobile market with all-inclusive monthly
pay-as-you-go packages available as cheaply as 7.50 euros.
"Austrian operators spent about 60 percent of annual mobile
revenues in acquiring broadband spectrum in what appears to be
the upper valuation limit," said Drossos, adding that this
represented 4 percent over the 15-year lifetime of the licences.
He said the relatively small volume of frequencies acquired
by Hutchison's H3G, which aims to increase its market share to
30 percent from 25, put the smallest operator at a disadvantage.
"For 3, this auction result suggests that the addressable
mobile market narrows down to urban/suburban areas. 3 as the
smallest player was effectively shut out by its large and well
funded competitors," he said.
After the auction, Telekom Austria will have 43 percent of
available frequencies, slightly less than its 44 percent market
share, T-Mobile will have 30 percent compared with 31 percent
market share, and H3G will have 28 percent.
Georg Serentschy, head of the telecoms regulator, defended
the high proceeds raised.
"In the end, the total market value was priced in here," he
said. "Austria is an exemplary country in mobile telecoms."
He added that the regulator would keep a close eye on
whether prices for consumers and businesses would rise in the
wake of the auction.
The high proceeds will represent a welcome windfall for the
new Austrian government, still the subject of coalition
negotiations after inconclusive elections in September.
The government had reckoned with 600 million euros, 250
million of which it had earmarked for telecoms infrastructure -
but also faces a likely multi-billion-euro bill for the winding
down of struggling state-owned bank Hypo Alpe Adria.
Some of the operators demanded that more of the proceeds now
be used by the government to fund mobile development.
($1 = 0.7302 euros)
($1 = 0.6178 British pounds)
(Editing by David Holmes and David Cowell)