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Operators keen to enter 3G arena

15 Jul 2003

Estonia’s three competing GSM operators have each filed applications for third-generation (3G) mobile licences with the country’s Communications Board. The regulator is planning to offer four 3G concessions priced at EUR4.5 million apiece, with interested companies required to pay the licence fee plus state taxes of EUR45,000 no later than 1 August. Eesti Mobiletelfon, Radiolinja and Tele 2 [TEL2a.ST] are expected to receive their licences by the end of this year, and will be mandated to provide 3G network coverage to 30% of the population by the end of 2010. The fourth concession will be put out to public auction from 1 November 2003 with a starting price of EUR4.5 million. The tender is expected to reach a conclusion by the middle of 2004.

Estonia will become the second of the three Baltic states to undertake the 3G licensing process following Latvia’s award of two concessions in the autumn of 2002. The Latvian government held an auction for two 3G licences and one combined GSM/UMTS concession, and whilst incumbent operators Latvijas Mobilais Telefons (LMT) and Tele2 each paid LVL5.8 million (EUR9.6 million) for one of the stand-alone 3G licences – which are valid from 1 January 2003 to 31 December 2017 – no bids were received for the third GSM/UMTS licence. In late 2002 the Latvian state conceded it had no clear strategy on how to proceed with the sale of the unwanted licence, with many companies reputedly staying away due to concerns over the high asking price and the fact that the award contains no legal provision for them to resell the licence should they need to do so. A number of international investors, including Estonian operator Radiolinja, had been rumoured to be ready to participate in the 2002 tender, but passed on the opportunity, citing the poor economic viability of the project.

Radiolinja is the smallest of Estonia’s three GSM operators and has been struggling to add subscribers in a relatively mature market. It hopes the advent of 3G services will inject new impetus into the sector, which grew by just 9% to 774,000 subscribers during 2002. The market leader by some way is Eesti Mobiletelefon, 49%-owned by TeliaSonera, which had 428,000 subscribers at the end of 2002, up from 383,000 the year before, ahead of Tele 2 with 190,000 customers (180,000) and Radiolinja with 156,000 (147,000). All three operators offer WAP services, whilst Eesti and Radiolinja have also launched GPRS.


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