Spectrum Auction Back On Again

The Government's troubled 3-G cellular telephony spectrum auction sputtered back to life this morning, with Round 7 of the auction this morning revealing new bidders, including Fay Richwhite-backed Jump.

Total bids of $39,197,627 are up about $5 million on bids received in the sixth round on Wednesday, but still well below the bottom of the Government's unofficial valuation range of $50 million to $500 million.

After a "clear" bidding round on Wednesday in which no new bidders emerged, it appeared the Government faced the embarrassing prospect of having to accept very low offers under the terms of the auction, which requires a sale after the second "clear" round.

In that round, only three existing major players in the NZ industry - Telecom, Vodafone, and Telstra Saturn - placed bids, meaning only three bidders for four blocks of spectrum.

No single buyer is allowed to buy more than 25% of the 3-G spectrum on offer, although no such restriction applies to more useful 2-G spectrum which is on offer in the same auction process.

There were no bidding rounds yesterday as the Government suspended bidding for fear that a second clear round could emerge before the Court of Appeal had dealt with application to stop the auction by the New Zealand Maori Council. The court threw the application out, allowing bidding to resume this morning.

While the Government can postpone or cancel the auction at any time, no consideration has been given to that, according to a spokeswoman for the acting Minister of Communications, Michael Cullen.

Cullen is acting for Trevor Mallard, who is on leave, who in turn is acting for Paul Swain, who will only return to full Ministerial responsibilities next week after prolonged medical treatment.

The ninth round of bids is scheduled for this afternoon.

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