Sweden's incumbent telco not fit to operate 3G

Sweden's Telia has become the first incumbent telco to lose out on a UMTS licence in its own country due to technical deficiencies.

The Swedish regulator - National Post and Telecom Agency (PTS) - said Telia has failed to prove it has the technical capacity to fulfil the promises made in its 3G licence application. A PTS spokeswoman said: "Telia said it would give Sweden 98 to 99 per cent coverage but when we looked at their technical plans we didn't see how they could do that." The licences have been awarded to Europolitan, HI3G, Orange and Tele2. The PTS spokeswoman estimated that 20,000 base stations were needed to secure network coverage and while HI3G was set to install 20,800, Telia had planned to install only 4,100. "With this few base stations, Telia cannot give good coverage," she said. Telia also failed to convince the Swedish regulator that it would plough sufficient capital investment into the 3G network. The spokeswoman said: "Differences are also visible in the amount of investment the players are putting into it. HI3G says it needs to invest E35bn (£21bn) but it is a new player in Sweden so it needs to build up a network but then there is Europolitan, an established player, who is investing E26bn (£15.7bn) in its Swedish network. However, Telia said it would only invest E11bn (£6.7bn) - we were a little surprised by that." In a statement, Telia said it will carry out a detailed analysis of why it failed, claiming it was extremely surprised as it filled all the important criteria. However, Robin Bothsworth, director at Schema predicted that the Swedish telco was not out of the 3G race completely. "The 3G race is never over. Companies can be bought out. 3G implies massive investment and investors want ROI so they are looking for partners. Telia can still play in the 3G arena through procurement or investment," he said, adding: "Though I do think someone made a mistake, a country the size of Sweden needs at least 10,000 base stations." The four successful applicants will pay 0.15 per cent of annual turnover of the network to PTS for the next 15 years. Other telcos ruled out due to technical deficiencies include Broadwave, Mobility4Sweden, Reach Out Mobile and Tenora. The news of Telia's loss took a toll on its market performance with shares tumbling 14.29 per cent to trade at E6 (£3.65).