Telecom keeps auction alive with surprises

By PAULA OLIVER

Controversial bidding marred the Government's radio spectrum auction yesterday, when Telecom withdrew $21 million worth of third-generation (3G) bids and sent the auction's total value spiralling.

The auction almost hit the $100 million mark late last week, and Telecom's surprise move left it nursing a sudden but temporary drop to $78 million.

Late in the day, Telecom re-entered the fray with another bid, pushing the total back to $98 million.

But while Telecom's tactics were under question from all sides, speculation is growing that Jump Capital's complete withdrawal from the auction on Friday could indicate that it is looking to secure an agreement to use a block of 3G being saved for Maori interests.

Before the auction began three months ago, the Government agreed to offer a slice of 3G spectrum to a pan-Maori group at a discount price, in an attempt to increase Maori participation in the telecommunications sector.

A group known as the Maori Spectrum Charitable Trust has since appointed merchant banking firm Ord Minnett to help it to negotiate a deal with a commercial telecommunications company to use the spectrum.

After entering the auction amid giant predictions of how much it could spend to secure 3G, Jump Capital quietly exited without making a serious bid.

Rumours that Jump has been negotiating with Maori were deflected yesterday by charitable trust chairman Bill Osborne.

He would say only that his group was "making good progress" towards finding a partner.

"We're talking to people, but it's unlikely we'll secure anything final until the auction is over," Mr Osborne said.

"Until then, we have no certainty of what the spectrum is valued at."

Jump Capital, backed by cash heavyweights the Todd family, Sir Michael Fay and David Richwhite, recently took a 28 per cent holding in Radionet.

The fledgling technology business is rumoured to be looking at rolling out a high-speed wireless communications network in New Zealand and Australia.

Bidding will continue in the spectrum auction today.

A clear round ended proceedings yesterday.

Auction Rules

The auction will end after two consecutive rounds free of bidding in all 1600 lots.

* There is no time limit on the auction's life and there is nothing to stop it from continuing until next year.

* Bidders may withdraw one or any number of their bids without penalty, at any time.

* When a bid is withdrawn, the affected lot is not passed on to the previous highest bidder. Instead, it gradually loses value round by round, beginning from the amount that was withdrawn.

If nobody bids for it, the lot can drop back to its original reserve price.

* A withdrawn bid is counted as "activity," which is enough to keep the auction going.

* New bidders can register for the auction at any time.

* The auction cannot suddenly be closed by the Government without reasonable warning to bidders.

* Almost any rule can be changed by the Government.