Austrian telecoms watchdog to hear 4G auction gripes

VIENNA (Reuters) - Austria's telecoms watchdog will hold a hearing of complaints by operators about the 2 billion euro ($2.8 billion) auction for fourth-generation frequencies, which was criticized for being too expensive.

The 4G auction in Europe's most price-competitive telecoms market raised four times the minimum set by the regulator and was the most expensive in Europe per head of population.

The head of the regulator, Georg Serentschy, told Reuters on Friday that the watchdog would hear the operators' complaints at their request but could not change the auction results announced this week.

The hearing date is to be decided next week and will be on either November 4 or November 11, three sources familiar with the situation told Reuters.

The operators will have to file formal complaints with a court if they want to pursue their grievances.

Telekom Austria, the country's biggest operator, grabbed half the spectrum on offer in the auction of at a price of 1 billion euros, leading to credit downgrades from Moody's and S&P after the company said it would raise debt to pay for it.

Hutchison Whampoa's H3G, the country's smallest carrier, won only 18 percent of the available frequencies for 330 million euros and did not buy any of the valuable 800 megahertz (MHz) spectrum that is ideal for more remote rural areas.

Deutsche Telekom's T-Mobile Austria bought the remaining 32 percent of the spectrum for 654 million euros, including a third of the 800 MHz frequencies, with Telekom Austria taking two thirds.

All three operators have complained about the auction process, which required them to submit blind bids to prevent collusion. This required them to bid without knowledge of the extent of demand for any particular frequency block, thereby pushing up the price.

"It was extortion," T-Mobile Austria's Chief Executive Andreas Bierwirth said at an industry event late on Thursday.

But Serentschy said that even when the extent of the demand was revealed to the bidders in the 39th of the 72 rounds, the aggressive bidding did not stop.

"There was no reaction to this strategy - they were still very much on the offensive," he said.

The regulator will present its own analysis of the auction to the media on Monday.

(Reporting by Georgina Prodhan; Editing by David Goodman)