Hong Kong's third-generation (3G) mobile auction faces a poor response from operators, who are still guessing who will take part. The invitation period for applications, which will end at 5pm today, is clouded with uncertainty after last week's closure of financial markets in the United States. 'It is such a bad thing to predict,' one operator said. 'While we are preparing [for the 3G auction], we are still waiting cautiously for the stock-market opening in the US. We need to feel safe before making a decision.' Analysts said the attacks on the US would cause concern for 3G operators about their ability to raise funds in the capital market and for possible strategic alliances. None of Hong Kong's six mobile operators was willing to talk yesterday about whether they would bid for a 3G licence. Some cited a confidentiality agreement with the Office of the Telecommunications Authority (Ofta). There was speculation whether Ofta could attract a minimum of four bidders after Peoples Telephone appeared to be dropping out of the race because of shareholder disagreements. Chief executive Charles Henshaw said yesterday he could not provide information on the company's next step. An Ofta spokesman said the authority would not reveal the applications received for the auction, which could begin as early as tomorrow. Analysts believed there would be enough bidders, with the big three - Hutchison Telecom, CSL and SmarTone Telecommunications - all participating. New World Mobility and Sunday Communications were the wild cards. No foreign telecoms tie-up or alliance is anticipated in the auction, according to analysts. 'The auction will be a 180-degree change from European auctions, conducted at the top of the market, to the Hong Kong auction, which is being done at the bottom of the cycle,' said Niq Lai, an analyst at CSFB. Assuming a minimum of four bidders, licences will be granted at a reserve price, which means HK$50 million flat royalties for the first five years, with a pledge of 5 per cent of future network revenues in years six to 15. 'For operators to win at a reserve price is good because it has lifted their financial pressure,' Mr Lai said. 'But a minimum price means that is the highest price that 3G operators are willing to pay for their businesses.'
