Singapore to issue four 3G licenses in auction

Singapore''s government will auction four 3G licenses to mobile phone companies, enough to enable the island-state''s three incumbent operators and one newcomer to bid.

The Singapore Government announced it will auction four third-generation (3G) licenses to mobile phone operators. That gives the city-state's three existing operators - Singapore Telecommunications, MobileOne Asia, and StarHub Mobile  – the opportunity to bid, along with one newcomer. The minimum price for the licenses will be S$150 million.

Global operators such as Deutsche Telekom and France Telecom as well as Hong Kong-based Hutchison Whampoa could be interested in bidding for a Singapore license, analysts say, but it's unlikely they will push the price up to anything like the heights reached in Europe, where bidders shelled out a combined $78 billion for licenses in the UK and Germany. That's because they are burdened with debt and still have more to pay out to build their networks.

Singapore, with its population of four million, is shaping up to be the fastest growing 3G market outside Japan. Cellular phone users rack up Asia's highest monthly minutes of use. In the case of MobileOne, that's 430 minutes. 3G technology promises to allow high-speed, always-on internet access to mobile phones and other hand-held devices. The technology is expected to be deployed by 2003. In the meantime, an interim technology, allowing faster data transmission that existing systems, is expected to be deployed by the end of the year.

Singapore is seen as a springboard for operators seeking to build a regional presence across the region. SingTel, which has $3.5 billion in cash, has already taken stakes in Globe Telecom, the second biggest mobile phone company in the Philippines and in Advanced Info Services, Thailand's biggest mobile phone company. It's planning to bid for 3G licenses in Taiwan, Malaysia, Indonesia, China, Hong Kong and Australia.

"With 3G we will aim to work with equipment makers and network suppliers to explore creative ways to share the risk and rewards," says Chua Sock Koong, SingTel's chief financial officer.

Singapore's decision comes less than a months after Hong Kong's Office of Telecommunications Authority said it too would require operators to bid in an auction, reversing an earlier decision. Hong Kong will also issue four licenses.

SingTel, which has $3.5 billion in cash, has said it is keen to team up with one of the smaller operators, such as Sunday Communications to bid for a Hong Kong license. The Hong Kong government said it would adopt a "hybrid" method of issuing the licenses in which operators would first have to commit to a certain level of coverage, investment and network build-out before being allowed to make a cash bid. There are six mobile operators in Hong Kong.