French 3G auction in turmoil over withdrawn applications

Telefonica and Suez Lyonnaise des Eaux have withdrawn their application from the French 3G mobile licence contest just days before the closing date, complaining that the existing licence fee is too high.

In a statement, the Spanish-French consortium said the licence fee does not reflect the situation of the market, particularly as other European countries have lowered their prices in recent months. The decision may now force the French government to lower the price for licences, which could dent government finances. The consortium had been expected to bid for the four licenses along with France's existing mobile operators, France Telecom, Bouygues Telecom and the Vivendi subsidiary SFR. Bouygues has already opposed the high licence prices and will not confirm its bid until a company board meeting on 30 January. Despite the setback, the French telecoms regulator, ART, insisted the deadline for applications will remain 31 January and that the auction will operate under the terms published in August 2000.