Telecom gets biggest bite of mobile waves

By PAULA OLIVER

Seven months of intricate game-playing ended yesterday when the Government's radio spectrum auction closed.

The auction of second-generation and third-generation (2G, 3G) spectrum had been riddled with problems since it began last June, and was criticised by many bidders.

But at a total value of $133 million, the management rights part of the auction ended.

The slices of 2G and 3G spectrum on offer will be used to introduce the next generation of mobile services, such as video on to handsets.

Telecom ended the auction as its biggest spender, taking more 3G spectrum than any other player, and eventually parting with $37.3 million for a combination of two pairs of 3G and three pairs of 2G frequency.

TelstraSaturn, Vodafone and Clear Communications all grabbed slices of both 2G and 3G, while unknown player Stuart Beadle, bidding under the name Northelia, also walked away with some 2G spectrum.

The supposedly lucrative 3G spectrum fetched only marginally more than its 2G partner, averaging $2.5 million per 5Mhz, compared with $2.3 million for 2G.

After being put under the microscope earlier this week for a series of bizarre bids that prolonged the auction, Telecom welcomed its end.

Mobile group general manager Mohan Jesudason said the telco's purchases were a critical investment in advancing technology.

Telecom's opponents, who criticised the company's bidding strategies, were glad it was all over.

"We're ecstatic," said Walker Wireless chief executive Paul Ryan, who secured two chunks of 1098 spectrum that can be used for high-speed internet services. "It's panned out well - we've got some new players and everybody seems to have what they want."

Some industry experts had predicted the auction would raise hundreds of millions of dollars after British and European Governments got billions last year.

At one point that looked possible, but after soaring to $180 million, the auction's value plummeted when bidders began to withdraw.

To combat the bidding tactics, the Ministry of Economic Development changed the rules three times over seven months.

Communications Minister Paul Swain said the low prices achieved would ultimately benefit consumers.

Bidders must now go through a Commerce Commission approval process for their purchases that could take weeks. Vodafone, which applied to the commission last year, has already secured approval.

Clear Communications, which entered the auction process several months after it began, said vigorous competition would be the auction's legacy.

"This is a big step forward to our goal of achieving a strong position in the wireless and mobile data markets," said chief executive Peter Kaliaropoulos of Clear's 2G and 3G buys. "We expect more vigorous competition and real differentiation in mobility services."

Mr Kaliaropoulos said Clear's focus would now shift to working more closely with Vodafone and other partners to bring new services to the market.

The two big questionmarks concern the intentions of Northelia and the Maori Spectrum Trust, which has discounted access to a portion of 3G.

The Maori group had been rumoured to have reached an agreement to lease its spectrum to a telecommunications newcomer, but that has not been confirmed.

During the auction's seven months, several players fell by the wayside. They included ihug, Jump Capital and Australia's Hutchison Telecommunications.