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Spectrum cash windfall looms

By Rob Hosking

Friday 5th May 2000

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Delays in selling off spectrum caused by holdups dealing with Maori claimants will see the government reap hundreds of millions of dollars extra for the valuable frequencies when they are sold.

The government could be in for a windfall of $1 billion from the telecommunications spectrum auction due to be held in July, five times more than the top figure officials have accounted for.

While the official estimate for revenue from the auction remains $50-200 million, massive bids for similar auctions overseas suggest that estimate is very much on the low side.

The UK government auction last week reaped the equivalent of just under $70 billion. Its original estimate was about $6.2-9.3 billion.

Considering population and other relevant factors, analysts estimate the New Zealand government could generate about $1 billion from its sale.

The spectrum is to be used for third-generation technologies for mobile telephones, allowing video and data to be accessed by mobile handsets.

All the main players operating in the New Zealand telecommunications market have expressed an interest in bidding for the four spectrum rights which will go up for auction on July 10. At least one other international carrier - UK wireless firm Orange, which owns Australian carrier Hutchison - has also been tipped to bid.

The owners of the two current mobile networks, Telecom and Vodafone, will definitely bid, as they need the spectrum to build value on their networks. Telstra Saturn is also seen as a probable, as is Clear Communications.

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