French govt raise stakes on new 3G licence

The French government has raised the stakes for entry bidding on the fourth national 3G mobile licence, setting €240 million as the asking price, up from the previous €206 million price tag.

It was anticipated that the bidding process would be initiated before the end of July but has now been extended by the government to accommodate the change in entry pricing. Interested buyers need to lodge their bids by October 29 with the expectation of an announcement within eight months.

However, the bidding process could be derailed by angry carriers who claim the licence fee is severely undervalued.

France Telecom, which along with SFR and Bouygues Telecom invested €619 million each in their 3G licences, announced that it would challenge the decision with the European Commission. “France Telecom is going to complain to the European Commission about state aid, that is the advantage being granted to the fourth operator compared to the other three holders of mobile network operating licenses," a spokesman for France Telecom said.

The incumbent carrier has said that it is not interested in taking part in the auction, but wants to ensure a “fair” bidding process.

Both Virgin Mobile and French ISP Iliad  have confirmed their interest in bidding for the fourth 3G licence.  The new licence is due to be awarded in 2010.