In these, the licence is awarded on the basis of merit, not price. It was prompted to do this by fears that some companies could be priced out of the contest and that the eventual high cost would be passed on to the consumer. Germany's telecoms regulator announced last month that 12 companies can join the bidding in its auction for third generation mobile phone licences. The government hopes for a massive windfall from the auction. Bond bonanza To be in with a chance, telecom companies have to have fairly deep pockets.
Bonds are effectively IOUs.
When the bonds mature, the lenders or bondholders get the money back. Deutsche Telekom is set to put the bonds up for sale next week. The company was already expecting to have to pay a hefty interest rate on their borrowing. Already, some analysts have questioned how much demand there will be for the bonds. So far this year, Holland's KPN, Vodafone, France Telecom and WorldCom have launched bumper bond issues.