Vodafone and France Telecom have made heavy investments in Switzerland ahead of its UMTS auctions.
The Swiss UMTS auction process kicks off next Monday. As speculation grows about who the major winners and losers will be, and whether the auction will raise substantial funds for the Swiss government, more and more companies are linking up ahead of the bidding. Vodafone and France Telecom have both made substantial investments in auction contenders over the past few days.
The auction certainly looks more competitive than that in Austria. Instead of six bidders for effectively six licenses, there will be nine bidders for four licenses – in a market with three incumbents. However, a lot of the bidders look unlikely to stay the course.
Out of the incumbents, diAx’s chances look less than certain. Its largest minority shareholder is a foreign telecoms operator (SBC of the US); the remainder is held by several small utility companies. Considering the fate of Italy’s Blu consortium, which had a similar ownership structure, the signs are not positive – especially considering that BT was actively pursuing a strategy of pan-European expansion. SBC may well be less keen to commit its funds.
Out of the new entrants, NTL (Cablecom), Telenor, and fixed-line operator Sunrise also look to be less than committed, given their shallower pockets. None are likely to be prepared to pay high prices for a license. And given that the remaining new players are Deutsche Telekom, Telefonica and Hutchison, they are unlikely to get one cheaply enough to be financially viable.
Meanwhile, the country’s largest operator, Swisscom Mobile, which is now 25% owned by Vodafone, looks certain to win a license. It has both the necessary funding and the most to lose from not building a 3G network. Similarly, now France Telecom has acquired the rest of Swiss Orange from Germany’s E.ON, it too will be very reluctant to miss out.
So, whilst the exact outcome of the auction process is as unpredictable as anywhere else in Europe, the serious competition looks like it may well be between just five or six players. The bidding looks likely to go above Austrian levels, and the opportunists are likely to be kept out. The Swiss market looks like it will be another medium-priced victory for the mobile giants.
