The proposed sale of the fourth French 3G licence has descended into near farce as those supposedly keen to bid have walked away leaving the ISP Illiad as the only interested party. The deadline for applications is the 29th October, although observers believe the likelihood of a fresh candidate appearing is remote at this stage.
Numericable and Virgin Mobile France, which previously said they were discussing options to jointly bid for the licence, have now jointly decided that unfavourable regulations and uncertainty surrounding the overall Capex requirements had forced them to reject any idea of bidding. This move follows decisions by Egypt's Orascom Telecom, the French investment company Bollore and the local alternative telecoms operator Kertel to also abandoned plans.
Speaking on behalf of Virgin Mobile, Numericable CEO, Pierre Danon, said that the two firms had spent a considerable amount of time exploring the opportunity provided and in talking to the three incumbent cellcos, but had decided that "given the conditions on the licence, we think it will be very difficult for the holder of the fourth licence."
Under the terms of the licence award, the successful bidder is required to build a network to cover 25 per cent of the French population before it can reach a roaming agreement with other operators. Danon claimed that the uncertainty over the timeframe and costs related to hitting this target made it too risky to proceed. "The newcomer will need some 1,000 antennas to reach that threshold. It would have to install the antennas at new locations or on the sites of existing operators, effectively increasing the risk and costs associated with the project. The business case for the project could entirely fall apart, and the level of uncertainty is very high."
The lack of interest in this 3G licence will potentially embarrass the French government, together with the three existing 3G operators who have each complained bitterly about the low-cost of entry for this fourth operator.
However, the frequencies that make up the fourth 3G licence represent only about a third of the frequencies that the three established operators were allocated with their licences back in 2001 and 2002. Two more sets of frequencies will be auctioned in a second phase and will be open to all parties, including the three existing network operators.
For more on this story:
Iliad's campaign for French 3G licence heats up
Virgin Mobile taunts market with French 3G licence bid
French 3G licences: The never-ending story
French president gets involved with fourth 3G licence