Milan - Italy's auction of high-speed cellphone permits may raise e25 billion (R157,75 billion) as Deutsche Telekom and Hutchison Whampoa join the bidding for a share of Europe's biggest wireless phone market.
Both groups were in talks to buy a stake in Andala, a group bidding for a licence, reported Ansa, the news agency, citing an interview with Vincenzo Novari, Andala's director-general.
Hutchison was expected to clinch an agreement with Tiscali to join its bidding group, beating out Deutsche Telekom, Financial Times said in its online edition.
Hutchison, Deutsche and Tiscali, which founded Andala, declined to comment.
Deutsche Telekom, Germany's biggest phone company, and Hutchison, owned by Hong Kong billionaire Li Ka-shing, won cellphone permits in Britain and are vying for licences in Germany's auction, now in its fourth day. Winning an Italian permit to sell faster Internet access and video on cellphones would help the companies build a European network.
"If you have pan-European aspirations, then you will pay what it takes to be in the Italian market,'' said Fanos Hira, an analyst at Bear Sterns in London. "We think the Italian licences could fetch e5 billion each."
Italy, with about 30,5 million subscribers, will sell five cellphone permits in October. Bidders must pay a minimum of about $1,9 billion for each licence. They will also have to prove they will be able to build a network to qualify.
At least seven bidding groups have said they will apply, including the four existing Italian cellphone companies, Telecom Italia Mobile, Omnitel Pronto Italia, Wind and Blu. Newcomers are in groups such as Ipse, Dix.it and TU Tlc Utilities.
The biggest rivals to Deutsche Telekom and Hutchison are already in the race to enter Italy. British Telecommunications is backing Blu, France Telecom is a partner in Wind and Vodafone Group owns Omnitel.
"I am sure Hutchison is very aware Italy is a huge market, and the big boys like them will definitely want to be here," said Laureen Cook, at KPMG Consulting in Milan. "That will also jack up the prices for the licences."
With the Italian auction expected to fetch at least nine times what a similar auction in the Netherlands drew last month, bidders would want to team up and bid jointly to reduce the costs of the permit and building the network, analysts said. - Bloomberg