Portugal has awarded third-generation mobile phone licences to the country's three existing mobile network operators and a consortium led by a domestic power utility.

The licences were awarded on the basis of merit and the successful bidders were: Optimus, part of Portugal's Sonae group, Vodafone's Telecel, Portugal Telecom's TMN and ONI-WAY, a venture led by Electricidade de Portugal's telecoms arm.

They will pay 20bn escudos ($89m) each for the permits as well as an annual usage fee for the radio-electric spectrum.

The licences - awarded in a "beauty contest" on the basis of technical merit, feasibility of business plans and the financial strength of bidders - were cheap compared with some others handed out in Europe in auctions earlier this year.

Different approach

Auctions in Germany and the UK had raised an average of 8.4bn euros ($7.7bn) and �4.5bn ($7.1bn) per licence respectively.

Italy and the Netherlands were among those that also held auctions, but the results disappointed their governments.

Sweden, which awarded its 3G licences earlier this month, followed a markedly different approach, charging licence holders a nominal fee plus 0.15% of annual turnover in the hope of encouraging faster development of new services and lower customer charges.

Seven groups had taken part in the Portuguese tender.

Industry sources estimated the new licence holders would have to invest about 180bn escudos each to set up 3G networks.

Services are due to be launched in 2002.