German mobile auction nets over £30bn

An auction for the rights to operate the next generation of mobile telephone service in Germany ended Thursday with six companies offering final bids of 98.807 billion marks (£30.7bn).

An auction for the rights to operate the next generation of mobile telephone service in Germany ended Thursday with six companies offering final bids of 98.807 billion marks (£30.7bn).

The auction ended after 173 rounds with the six bidders each receiving two frequency blocks.

Previously, both T-Mobil and Mannesmann had said they wanted to each have three blocks - meaning that another bidder would have dropped out.

The only other bidder to have dropped out of the auction was Debitel, a unit of Switzerland's Swisscom, which left the auction last Friday. That means that had the remaining bidders agreed then to only take two licenses each they could have paid around 56.5 billion marks (£17.6bn) total - more than 40 billion marks (£12.46bn) less than the final bid.

Finance Minister Hans Eichel insisted that all the proceeds will be used to pay off government debt, resisting a clamor for the windfall to be used to fund a variety of causes, from combating neo-Nazi crime to investigating whether mobile phones damage users' brains.

The Finance Ministry initially said it expected to reap only 20 billion marks (£6.2bn) from the auction, though newspaper reports have suggested government officials were secretly counting on the 60 billion mark (£18.66bn) haul forecast by financial experts.

Deutsche Telekom's mobile subsidiary T-Mobil and Vodafone AirTouch PLC's unit Mannesmann had drove up the cost for all the players by trying to secure the three frequency blocks.

Also getting licenses were E-Plus, which is backed by a consortium of Japan's NTT DoCoMo Inc., the Netherlands's KPN Mobile and Hong Kong's Hutchison Whampoa Ltd.; France Telecom-backed MobilCom AG; and another consortium called 3G representing Telefonica SA and Sonera Corp.