French 3G licences go back under the hammer

NEWS The French government has re-opened the auction for telcos still interested in bidding for 3G licences. The original "beauty contest" was cancelled after it failed to attract enough investors. Only Vivendi Universal and France Telecom bought licences when they were first sold off for E4.95bn (£3.09bn) in a bidding process judged by the French Government. The licence prices were slashed to E619m (£386m) last October after Bouygues Telecom - the country's new entrant licence holder - dropped out of the bidding process. Bouygues said at the time that the cost of building a UMTS network on top of purchasing the licence represented an "unreasonable financial risk". A spokeswoman from Bouygues today said: "We are waiting for the terms and conditions of this auction to decide whether we should be involved." Michelle de Lussanet, telecoms analyst at Forrester Research, said: "The French government has cut the licence prices as it wants a competitive market and the introduction of new services." Lussanet added: "It can't cut the price any more... Like most of the governments holding auctions, it's already allocated the money it thought it could raise from the bids to other government departments, before it got the cash." The auction is expected to be finalised by autumn this year. Analysts were unable to comment on which telcos may bid for the last two licences.