Austria mobile auction targets at least 526 mln eur

VIENNA, March 18 Tue Mar 19, 2013 1:41am IST

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VIENNA, March 18 (Reuters) - Austria aims to raise at least 526 million euros ($682 million) from the sale of radio frequencies that operators need to build superfast mobile broadband networks, the regulator said.

The Austrian Telecom Control Commission (TKK) published details on Monday of an auction it plans to hold in September, following similar sales in European countries including Germany, France and Britain.

Georg Serentschy, head of the RTR regulator that works with the TKK, said there was no upper limit to the bids the country's three operators could make for the 28 blocks of 800 megahertz (MHz), 900 MHz and 1800 MHz frequencies on offer.

But he added: "It's not about maximising the proceeds."

One of the aims of the auction is to promote better mobile coverage of remote and rural areas of the Alpine republic by attaching conditions to the licences about the percentage of the population that operators much reach.

The Czech Republic this month suspended its auction of mobile frequencies after bids rose so high that the regulator feared it would lead to unrealistically high prices for services and could slow efforts to build the networks.

The sums being raised are tiny in comparison with the tens of billions that telecom operators paid in 2000 to buy licences for the last generation of mobile technology, 3G - far more than they reaped in profits from their investments.

But the auctions come at a tough time for operators who are fighting price wars instead of persuading customers to pay more for the increasing load on their networks of mobile Internet services, many of whom are slashing or ditching dividends.

Britain raised 2.3 billion pounds ($3.5 billion) from its fourth-generation (4G) frequency auction last month, France raised 2.6 billion euros more than a year ago, and Germany raised 4.3 billion euros in Europe's first 4G auction in 2010.

The United States, Japan, Korea and Scandinavia already have 4G networks.

Austria, with its population of just 8.4 million, is one of Europe's hardest-fought markets and has the lowest starting prices for mobile packages, at 7 euros per month including bundles of voice minutes, SMS text messages and data.

The country's smallest operator, Hutchison Whampoa , bought the second-smallest Orange Austria at the start of this year in the hope of easing competition with bigger rivals Telekom Austria and T-Mobile.

T-Mobile raised its contract prices for new customers this month in a move seized on by some observers as an early sign of market repair, although the operator cut subsidies and said it might earn less per customer in the long term.

Two blocks of spectrum have been reserved in the Austrian auction for a potential new entrant, although the likelihood of one materialising is low, experts believe.

"We have really passed the stage where there is room for a new entrant," said Bengt Nordstrom, co-founder and chief executive of Swedish telecoms consultancy Northstream.

"I know that the regulators and the competition authorities would like to have it but it's unrealistic." ($1 = 0.7717 euros) ($1 = 0.6619 British pounds) (Reporting by Georgina Prodhan; Editing by Bernard Orr)

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