Mr Fabius stepped in to help the telecoms industry

The extension will dramatically ease the financial burden on the country's indebted telecoms firms and increases pressure on other governments to follow suit.

However, Germany's telecoms regulator - which has said that licence holders can share the cost of building their networks - has already said it could not change the licence conditions.

Finance minister Laurent Fabius told the French parliament on Tuesday that telecoms companies that had been due to make an initial payment of almost 5bn euros would now pay just one eighth of that, 619m euros.

Jean-Marie Messier, the chief executive of media, telecoms and utilities group Vivendi Universal, which has one of France's two licences, called the decision "pragmatic and realistic".

The size of the 3G or UMTS licence fee will also be linked to UMTS revenues, Mr Fabius said.

His announcement that there will be a second auction of two remaining UMTS licenses shortly led Mr Messier to speculate that it could come ahead of the presidential election in spring.

"It's a question of weeks rather than months, and in any case before the end of the year," Mr Messier predicted.

Brawl

Vivendi Universal has argued with the government for some time over payment of the 3G license fee.

Mr Messier welcomed the government's move

Earlier this month, the company withheld the first tranch of the fee it owned the government and called for the terms of its license to be withdrawn.

Soon after, it paid up "because it [was] confident in the willingness of the different parties involved to continue current talks".

In early trading on Wednesday, shares in France Telecom, Bouygues and Vivendi rose, with telecoms equipment maker Alcatel seeing its shares rise 13%.

Follow suit

Pressure may now increase on other European governments to follow suit.

Some may fear they could face legal action from companies that lost out last year.

Other problems could arise.

Other governments have set aside the money raised from last year's bumper 3G auctions across Europe for separate projects.

In France, the money had been earmarked for the national pension fund.

Some argue that the price of bailing out the French phone firms could be lower pensions or higher government debt for many years to come.