French 3G climbdown offers UK telcos glimmer of hope

Billions become millions...

The French government yesterday performed a stunning volte-face over the price of 3G licences that in turn will offer hope to UK and other European telcos struggling to cope with the multi-billion dollar burden of owning third generation licences. The announcement came as part of France's budget statement and will see the cost of a 3G licence fall from E4.95bn (£3.1bn) to E619m (£388m). In addition the lifetime of a licence will be extended from 15 years to 20. In return the French government will impose a tax levy on 3G revenues. By the time the UK 3G bid reached its conclusion in April 2000 successful bidders had pledged a combined £22.5bn, the highest total for any European auction. Now Vodafone, One2One, BT, Orange and TIW will hope the Labour government reconsiders that commitment in the light of the French announcement. The situation in France is slightly different, however. Not only were French licence holders chosen on a 'beauty contest' basis where the government took the final decision but in the end some licences were left unsold. Only Vivendi Universal and France Telecom took up the offer. Yesterday's news is likely to renew the interest of Bouygues Telecom which declined to bid last time.