Spain holds auction for mobile licenses, hopes to generate $2 billion

Reuters

Spain kicked off its first-ever auction of mobile telecoms licenses on Wednesday in an internet contest the government hopes will generate at least $2.05 billion.

Eleven service operators applied and were granted the right to enter the auction, which is crucial in distributing enough mobile frequencies to allow operators to meet future customer demand for data use on smartphones and tablets.

The participants will bid for blocks of frequency, with up to 10 blocks being auctioned per day and 58 blocks up for sale, including some regional licenses. The duration of the auction will depend on the competing bids entered.

The bidders with the most firepower are likely to be Spain's largest mobile operators, ex-state monopoly Telefonica , Vodafone (Berkshire, England) and France Telecom's Orange (Paris, France), which together now have more than 90 % of Spain's mobile market.

Allocation rules will limit the total amount operators can have in each frequency, but most analysts expect the overall new distribution to have a limited impact on the largest players as few competitors are seen as having enough to invest in buying licenses and committing to expensive infrastructure rollout.

"We do not believe that the Spanish spectrum auction will lead to major changes in the competitive environment in the Spanish mobile market," Caja Madrid Bolsa said in a client note.

Cable operator ONO, Spanish telecoms provider Jazztel and regional operators like Euskaltel have shown interest in mobile licenses so they can offer more customers mobile services without having to rent competitors' networks.

(Editing by David Holmes and Jon Loades-Carter)

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