Vodafone only 3G 'B' bidder to include rollout delay penalties

kamobe

Today's Indo:

VODA FONE Ireland was the only applicant for one of the two 'B' 3G licences to pledge to subject itself to penalties for any delays under rollout obligations contained in the licence requirements.


The Irish Independent has learned that 02 Ireland chose not to include any such fines in its application for the 'B' licence.


A source close to the O2 bidding process said that these penalties were not required in the tender document and the issue was down to interpretation.


Vodafone Ireland is now looking for an extension until September 12 before it decides to accept one of these licences and it has given the penalties as one of the reasons for this uncertainty.


Elsewhere in Europe, voluntary penalties have ranged from $0.5m to well in excess of $50m. However, in Vodafone Ireland's case, it is believed that the figure is more likely single-digit euro millions.


While all applicants were required to adhere to minimum licence requirements, the Office of the Director of Telecommunications Regulation (ODTR) 'B' licence tender document also refers to performance guarantees.


According to the telecoms regulator's tender document, each applicant was invited "to commit to voluntary performance targets backed up by financial guarantees, which will materially underpin the rollout and coverage obligations and any other offerings in its proposals".




Telecoms analysts said that O2 Ireland took a gamble by omitting the mention of any fines or penalties, because the sell-off of the licences took the form of a beauty parade rather than an auction. They added that Vodafone took a more careful approach.


At the time, although many potential applicants pulled out at the eleventh hour, it was not known how many bids there were for any of the Irish 3G licences and it is believed that adding in the penalties would help make Vodafone a more attractive licensee in the case of numerous applications.


The 'B' licences involve minimum requirements of 33pc demographic coverage to be fulfilled by the end of June 2006 and 53pc coverage by the end of June 2008.


The one 'A' licence, won by Hutchison Whampoa, has stricter rollout requirements expecting 53pc demographic coverage by the end of December 2005 and 80pc coverage by end December 2007.



Ailish O'Hora

The Corinthian

URL to the above article please?

kamobe

The article is here. You'll need to have an account(free) to view it, hence the paste.

JTMan

I gon't think Vodafone will go for the 3G licence this september but it probably will when the second set are issued. This increases the chances that Orange will go into the bidding for a 3G licence second time round here. I still think they will take over Meteor though.