Jump seeks leap to mobile market

By GEOFF SENESCALL

A third mobile player is actively looking to enter the local market to take on incumbents Telecom and Vodafone.

Leigh Davis confirmed yesterday that his new company, Jump Capital, whose investors include Sir Michael Fay and David Richwhite, were talking to Ericsson about a mobile initiative.

"Jump approached Ericsson a little while ago and said spectrum options are coming up and we've got some ideas about how we might play it, if we play, and can we talk to you as an equipment vendor," he said.

"We worked out an arrangement along those lines. We are evaluating the opportunity."

However, a final decision had not been made.

Asked whether anyone else might be involved in the partnership, Mr Davis said he was not in a position to comment. But he said from Jump's point of view it was a sizeable project.

Some analysts estimate that it would cost $700 million to set up the network and buy the spectrum needed to operate mobiles with returns on the initial outlay three years out.

However, Jump and Ericsson might simply look to just being wholesale operators, selling their capacity to third parties.

Formed earlier this year with the backing of a group of wealthy individuals (including Messrs Fay and Richwhite), Jump's mandate is to invest in Australasian telecommunications and technology companies.

It already owns a third of an Australian company called Crown Castle which recently bought Cable & Wireless Optus' cell site infrastructure in Australia. This infrastructure is used to operate a mobile network.

Mr Davis is also a former employee of the merchant banker Fay, Richwhite, which floated Telecom.

He was part of the Fay, Richwhite consortium which unsuccessfully bid for Bell South's New Zealand mobile network, which was sold to Vodafone in 1998.

Jump's initiative comes as the Government is about to auction off four packages of 3G spectrum, which enables high-speed transmission of data over mobile networks.

Bidders will line up early next month with the auction to begin on July 10.

ABN Amro analyst Jeremy Simpson estimates the spectrum price could go for $150 million.

However, he said there were moves globally by the International Telecommunications Union to increase the availability of 3G compatible spectrum.

"This potentially will decrease the price paid for the 3G spectrum currently being sold by the Government," he said.

Mr Simpson believes Telecom and Vodafone are virtually certain bidders, at least for defensive reasons. Telstra Saturn and Clear Communications are also likely bidders.

There have been suggestions in the market that Telstra and Clear might look to forge an agreement with an existing mobile operator.

"Other possible bidders are the other Australian mobile company Cable & Wireless Optus and new entrants such as Hutchison and One.Tel," Mr Simpson said.

Brokers have also suggested that parties such as Sky TV and BCL would be possible bidders, given the convergence capabilities of the 3G technology.