Bloomberg News

Everything Everywhere Said to Seek $660 Million Airwave Stay

October 12, 2011

(Updates with Hutchison in penultimate paragraph.)

Oct. 12 (Bloomberg) -- Deutsche Telekom AG and France Telecom SA’s Everything Everywhere venture in the U.K. is in talks with European regulators about delaying the sale of frequencies potentially valued at more than $660 million, according to a person with knowledge of the matter.

Everything Everywhere was ordered to sell some spectrum as a condition of its formation in 2009. The venture is talking to the European Commission about postponing the transaction following repeated delays for a separate U.K. auction involving new frequencies, the person said, declining to be identified as the talks are private. The company also asked if it can reduce the amount of spectrum it needs to divest, the person said.

Everything Everywhere, based in London, became the largest mobile-phone operator in the U.K. after the merger of the two companies’ local units, overtaking Telefonica SA’s O2 unit. Rivals Vodafone Group Plc and O2 would be most likely to bid for the venture’s spectrum when it becomes available, according to Matthew Howett, an analyst at research firm Ovum in London.

Everything Everywhere declined to comment. Amelia Torres, a spokeswoman for the European Commission, also declined to comment, saying that “follow-up discussions on merger commitments are generally confidential.”

The spectrum the venture needs to sell could be worth about 425 million pounds ($666 million), based on prices paid for similar amounts in Italy in September, according to Daniel Gleeson, a research analyst at IHS Screen Digest in London.

U.K. Auction Woes

British regulator Ofcom last week delayed a U.K. auction of mobile-phone frequencies for high-speed networks to at least the fourth quarter of 2012 after operators including O2 and Vodafone objected to the auction design. The sale was intended for the first quarter of next year after more than two years of delays.

Hutchison Whampoa Ltd.’s 3 network may be most vulnerable to an auction delay, after the company said last month it may face congestion in its network by the end of next year.

“There is damage being done by the delay,” said James Barford, an analyst at Enders Analysis in London. “The operators are making decisions about building networks and capacity right now, so those decisions are not as good as they would otherwise be.”

--With assistance by Aoife White in Brussels. Editors: Simon Thiel, Robert Valpuesta.

To contact the reporter on this story: Jonathan Browning in London jbrowning9@bloomberg.net.

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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