Colt pays 30 times more for licence

UK telecoms companies have had six years to consider the lessons learnt during 2000's infamous 3G licence launch but it seems some paid more attention than others.

Ofcom, the UK telecoms regulator, has unveiled the price that bidders paid to win licences for recently auctioned spectrum. Colt Telecom, the fixed-line telecoms company, paid £1.5m for its licence, while close rivals such as Cable & Wireless paid only £51,000. Colt paid 30 times more than C&W, and almost six times more than the incumbent operator BT for exactly the same rights.

A Colt spokeswoman said the company was comfortable with what it had paid and argued that offering a lower price may have risked losing out altogether. The auction was conducted via sealed bids and two participants, including Orange, missed out after offering £50,000 in line with the reserve price. Ofcom declined to comment on the price Colt has paid.

It is the first time the UK telecoms regulator has auctioned spectrum - the frequencies which transmit mobile telecoms calls - since 2000 when five telecoms companies, including BT, shelled out £22.5bn for 3G licences. The 6.6 megahertz of spectrum on offer this time is less valuable than 3G spectrum and was previously utilised only to buffer other frequencies, acting like a pillow to reduce interference.

The auction, which raised £3.8m for Ofcom, represents the first in a string of 12 spectrum sales over the next three years. Colt and Cable & Wireless plan to use the spectrum to offer corporate customers converged fixed-mobile services.

Andrew Darley, an analyst at KBC Peel Hunt, said: "It sounds like Colt was desperate not to get left behind."