Spectrum bidders wary of 'showing their hands'

By PAULA OLIVER

Bidders predict that the Government's radio spectrum auction still has a long way to go, despite being kept alive by tiny bids.

Ihug director Nick Wood said that bidders were like America's Cup yachts before the starting line - jostling for position before the race starts.

"There are still a lot of people who haven't shown their hands and at some point the go button has to be pushed. We're still dealing with small amounts of money, but if you show what you want early then people will target you."

Small increases in bids have kept the auction dribbling along in the past week and total bids have now reached $36.8 million. That is barely above the reserve price for the lots and a far cry from the Government's hoped-for hundreds of millions of dollars.

All the action has been in the second-generation (2G) arm of the auction where bidders have outbid one another by small amounts each day. The third-generation (3G) side of the auction has failed to fire despite rumours that new challengers, such as Jump Capital, will enter the frame.

Mr Wood said he was happy with the way the auction was proceeding and did not see a need to continue with a legal case against the auction.

He had been concerned that no limit had been placed on how much 2G spectrum one player could purchase - leaving it open to large companies such as Telecom or Vodafone to outbid smaller players.

"So long as everyone plays fair there won't be the need to keep going with action, but we'll see how it ends before we make up our minds," he said.

Vodafone, Telstra Saturn and Telecom are bidding for 2G spectrum but have not been making the blanket bids Mr Wood had expressed concern about.

Mr Wood said most of the action was probably going on behind the scenes of the auction where deals would need to be made to set up a cellular network.

"There's much more to it than just buying spectrum, and it's going to cost a chunk of money to build a network."

Another high profile bidder, Nick Gordon, said he intended to increase the amount of 2G spectrum he was holding.

Mr Gordon, a director of the Pacific Retail Group, said the 10MHz matching pair he now held could be increased to 15MHz.

"We're seeing a clearer picture of what the bidders actually want to acquire now," he said, "but we haven't seen the surprise entrants, and there's not much solace for the Government who had hoped for more than this."