French government raises $3.45 billion in 4G auction


France sold off a second batch of higher-quality fourth-generation (4G) mobile frequencies for $3.45 billion in an auction that will shape the competitive landscape of the market for years to come.

Telecoms regulator ARCEP said on Thursday it awarded licenses to Vivendi's SFR, France Telecom and Bouygues, while it said a fourth bidder, Iliad , could apply to share SFR's network.  All four telecom operators are headquartered in Paris.

Together with a first batch of frequencies previously sold to all four operators for $1.2 billion, the French government has raised close to $4.7 billion, above the minimum amount targeted of $3.2 billion, ARCEP said in a statement.

The latest lots in the 800 megahertz band, dubbed "golden frequencies", were highly sought after by operators because they allow mobile signals to travel long distances without losing strength.

Such 4G frequencies are crucial to allow telecom operators to deliver fast mobile connections for customers surfing the web on tablet computers and smartphones, a lucrative and fast-growing market.

SFR won two out of four blocks after offering $1.39 billion, more than rivals, helping France's second-biggest operator to compensate for not getting what it wanted in the first round.

"We are investing heavily to have the most complete network, like we did yesterday for 3G and are doing today for fiber optic," SFR head Frank Esser said in an emailed statement, adding that the company was investing for the long term.

Bouygues Telecom was awarded one block for $892 million, while France Telecom's Orange France won the last block for $1.1 billion, according to ARCEP.

"It's a vital investment in the industry for the next 20 years which places us in first place in high-speed mobile broadband from the outset," a France Telecom spokeswoman said by email.

Soon-to-be new mobile player Iliad missed out after winning one of two larger blocks of 20 MHz along with France Telecom in the first round, when SFR and Bouygues won blocks of just 15 MHz each.

Iliad Chief Executive Maxime Lombardini said the second auction was "very unfavorable" for new entrants and that it came down to money.

"We had said that we would be reasonable, we kept our word and we are not worried in any way about our future deployment and development," Lombardini told Reuters.

Iliad won the green light earlier this month from ARCEP to launch a long-awaited mobile service after the regulator certified that the company had covered 27% of France's population.

(Reporting by James Regan, Gwenaelle Barzic and Gilles Guillaume; Additional reporting by Leila Abboud; Editing by Daniel Flynn)

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