France awards 3G licences

May 31, 2001
Web posted at: 1122 GMT

LONDON (CNN) -- France awarded two third-generation (3G) mobile phone licences on Thursday to France Telecom's Orange and Vivendi Universal's SFR.

Orange and SFR were the only two candidates to apply for the licences for high-speed mobiles that will allow phones to carry out multimedia tasks.

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The companies will pay a fee of 4.95 billion ($4.2 billion) for the licences, but the payment schedule will be changed following concerns over the debt burden Europe's phone companies are taking on to acquire 3G permits.

France planned to hold a "beauty contest" to award four licences rather than the auctions carried out by most other European countries. But only Orange (ORA) and SFR (PEX) put themselves forward.

The two other licences will be awarded at a later date, the authorities said.

Under a previous payment schedule Orange and SFR were required to pay half the licence fee within two years, with the balance spread over the rest of the 15-year duration of the licences.

The French telcoms regulator now says it wants 25 percent of the fee to be paid in the first year, but the terms for the balance will be changed, although no final details were released.

The regulator said the duration of the licences will be extended to 20 years from 15 years.

France's 3G contest was thrown into turmoil in January when two other expected candidates, Bouygues-owned Bouygues Telecom (PEN) and Telefonica-backed Suez Lyonnaise (PLY), both pulled out on the grounds that the cost was too high.

Three other possible bidders, Dutch KPN Telecom, Germany's Deutsche Telekom (DTE) and Hong Kong's Hutchinson Whampoa pulled out earlier on.

Auctions for 3G licences in the UK and Germany last year,  widely criticised for costing operators too much, raised £22.5 billion ($32 billion) and 51 billion respectively.

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