Eircom bid £1.15 billion sterling for one of five licences for third-generation mobile phones (UMTS) in Britain yesterday as several bids breached the billion pound barrier for the first time.
Eircom's bid was the highest of any competitor so far and places the company in the lead position for licence A. However, three other companies made bids of more than £1 billion yesterday as the total value of the five leading bids reached a massive £4.64 billion, nearly 10 times the British government's reserve price of £500 million.
The competition for the licences, which has involved 66 rounds of bidding so far, has become much stiffer in recent days, culminating in yesterday's billion-pound-plus bids. Some analysts are predicting the auction could end within two weeks, netting the British government some £10 billion.
British Telecom is currently leading the race for Licence B with an offer of some £1.08 billion; Worldcom is top bidder for licence C with an offer of some £785 million; Epsilon Telephonica is leading the bidders for licence D with an offer of some £824 million, and Orange has made the highest bid for Licence E with an offer of some £805 million.
As lead bidder for licence A, Eircom is leading the race for potentially the most lucrative licence. Licence A has the largest spectrum, or capacity, at 35 megahertz. It is not open to British Telecom, Orange, One2One and Vodafone, who already have a presence in the British mobile telecommunications market.
It is estimated that the eventual winner of licence A would have to spend an additional £2 billion to roll out the necessary infrastructure to support its network, which would have to extend over 80 per cent of the UK.
It is thought that a major rival for this licence is NTL Mobile, a joint venture between NTL and France Telecom. NTL bought Irish company Cablelink for £535 million (€679 million) last year and is seen as an aggressive bidder in any race it enters. However, the auction for the five licences is designed so that most of the companies, except those already present in the British market, can bid on all of the available licences. Eircom has led the bidding for all of the five licences at various times so far and it is understood the company would be happy to gain any of the five licences.
An Eircom spokesman said last night that its billion pound bid had probably surprised a few people in the UK but demonstrated that the company was serious about obtaining a British UMTS licence. He said the company would continue to bid aggressively and sensibly.
Eircom's position as leading bidder for licence A means it will sit out the next round of bidding on Monday morning.
