TeliaSonera Skips On Swedish License Auction

STOCKHOLM (Dow Jones)--TeliaSonera AB (TLSN.SK) said Thursday it intends to upgrade its Swedish mobile network, a move that could make it less attractive for rivals to bid in the upcoming auction for a new wireless license.

The Stockholm-based telecommunications operator will invest SEK1 billion over four years to extend its global system for mobile communications, or GSM, network to cover approximately 90% of Sweden, up from 70% of the country now.

The company decided to upgrade rather than bid for a new license in the 450 megahertz frequency band. Swedish telecoms regulator PTS plans to sell the new license to the highest bidder in February, aiming to ensure coverage in sparsely-populated regions.

The signals in the relatively underused 450 MHz band travel further than third generation wireless transmissions, making it more cost-efficient for less built-up areas, and meaning equipment investment is much lower than for other 3G technology.

Still, analysts said TeliaSonera's network investment plans could make the auction less attractive for prospective bidders as it beefs up its coverage in less-populated areas. "This is a way to beat down on potential competition in a preemptive way," said one analyst in Stockholm.

TeliaSonera said it will modernize its GSM network to provide higher data transmission speeds using a technology called enhanced data rates for global evolution, or EDGE. The technology allows people to surf the Internet at faster speeds than the conventional GSM system and at rates close to those that can be achieved with 3G.

At stake are primarily the 128,000 customers who use TeliaSonera's old analog network. This infrastructure covers about 90% of the land surface, and TeliaSonera intends to gradually move those customers to the extended GSM network before shutting the analog one down in three to four years.

"This is what we think is best for our customers. What others decide to do (in bidding for the new license) is up to them," said Marie Ehrling, head of TeliaSonera's Swedish unit.

The new license that PTS will auction in February is primarily aimed at providing mobile telephone services to consumers that are not served by GSM networks.

"If TeliaSonera really do as they have said, it's good for Swedish consumers," said PTS spokeswoman Katarina Kaampe.

She said PTS will proceed with the license auction, mainly for two reasons. There is no way to force TeliaSonera to do what it says it will, and 90% coverage of Sweden could still leave some counties with poor coverage, she said.

Kaampe said it's too early to speculate how TeliaSonera's move will affect interest in the auction.

The license conditions for the new network stipulate at least 80% coverage in each of Sweden's 21 counties.

At least one of the potential bidders for the new license said it won't change its plans after TeliaSonera's announcement.

"It doesn't affect our interest in the new license. We still see geographical coverage as the most important differentiating factor," said Arnfinn Roeste, chief executive at Nordisk Mobiltelefon AB, a company set up to operate new mobile telecoms networks on the 450 MHz band in the Nordic countries.

He said his company intends to build a network based on the competing code division multiple access 2000 technology, which has been heavily promoted by Qualcomm Inc. (QCOM).

If Nordisk wins the license, Roeste reckons the CDMA2000 technology will enable the company to provide a better service than TeliaSonera.

Roeste's company recently won a similar license in Norway and is in the process of building a network there.

Nordisk has said it intends to invest around SEK2 billion in a Swedish network.

Company Web site: http://www.teliasonera.com

-By Magnus Hansson, Dow Jones Newswires;+46 8 545 130 91, magnus.hansson@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 20th January 2005