With the next four months due to see mobile licences awarded in Italy, Sweden, Belgium and Switzerland, there is little sign of an end to spending for telecoms firms. Its debt levels have doubled to 30bn, hurt by the cost of licences and the doubling of its stake in Germany's Viag Interkom. This effectively raises the interest rate BT pays on its debt. Even worse for BT is that the agency had previously warned the BT rating could fall even lower. The logic for holding auctions is that telecom companies know the value of the licences best.
Sceptics point out that it is in everyone's interests for the licence fees to be high.
National governments get to boost their coffers, while the winners of the licences hopefully recoup the licence fee through increased revenues in years to come. The losers are at least comforted by the fact they have landed their competitors with a large bill. Analysts, however, wonder whether telecoms firms will have a tough time generating a return on their investments. It could take companies many years to recoup the cost of the licence and network investments. At present, many European networks are inadequate even for voice communications.