Government mulls fourth licence options; could offer spectrum to more than one bidder

1 May 2008

The government of France is considering plans to split the country’s fourth and final 3G operating licence and offer it to more than one company, if it cannot find a suitable candidate to take the whole spectrum allocation. In a press statement yesterday, the Prime Minister’s office said the telecoms regulator will now begin a consultation on the tender process which will end by 30 September. Arcep launched a tender for the fourth UMTS licence in March 2007 but received only one bid – from Iliad’s Free Mobile unit – which was later rejected as it had not met the required financial conditions. It is understood the bid stumbled as a result of Free’s insistence that it would not pay the EUR619 million (USD874 million) licence fee in one upfront payment, proposing instead to make payment through deferred annual instalments.

Iliad’s bid prospects appeared to improve in November 2007 when the French Senate adopted an amendment to the national budget for 2008, allowing the government to alter the financial terms and conditions of the unallocated licence. However, the government has now asked Arcep to consult on what options exist to develop MVNOs in the 3G arena and if there are some, to design measures to facilitate this. ‘The consultation will determine if, and under which conditions, an alternative scheme best responds to the objectives of stimulating competition in the telephone market to the benefit of consumers … That includes the improvement of the position of virtual mobile network operators, the development of innovation and the improvement in the area of coverage for mobile telephony,’ Prime Minister Francois Fillon’s office said in the statement.

France, Iliad (Free)