The bidders

Deutsche Telekom Mobilfunk (Vodafone-Mannesmann) E-Plus (Hutchinson Whampoa, KPN) Viag Interkom (BT, E.On, Telenor) MobilCom (with France Telecom) Group 3G (Sonera, Telefonica etc)

It is a modified version of the system used by the UK government to auction off its own licences.

Third-generation mobile phones will allow customers to access the internet on the move or watch near TV quality video.

In the UK a much higher than expected total of �22.5bn ($34.5bn) was raised.

The German licences are theoretically more valuable, although there have been signs that telecoms firms are finding ways to minimise the licence costs.

Forecasts halved

Mainly this has been achieved by a series of alliances. Forecasts for Germany's auction were halved after the licences covering the Netherlands raised $2.4bn, a third the amount expected.

That uncertainty has led to analysts predicting that the total raised by the licences could end up anywhere between 25 and 61 billion euros.

But it is now clear that the total will be greater than expected - with the surplus going to help reduce the budget deficit of the German government.

A UMTS licence is more valuable to an incumbent operator than to a new entrant because incumbents have to protect the business they have

Telecoms analyst

There are between four and six Universal Mobile Telecommunications System (UMTS) licences are up for auction.

Companies do not bid for the licence itself, but for 12 different frequency blocks.

For a single licence, at least two frequency blocks are required. But three are needed if the company aims to have a network which covers the whole of Germany.

This means that there could be just four licences on offer for firms which want to cover the entire German market.

More to come

Analysts expect Deutsche Telekom's T-Mobil, Mannesmann Mobilfunk, E-Plus-Hutchison, BT-backed Viag Interkom and France Telecom-backed reseller MobilCom to win licences.

Group 3G, a consortium of Finland's Sonera and Spain's Telefonica, is thought to be an outsider.

"A UMTS licence is more valuable to an incumbent operator than to a new entrant because incumbents have to protect the business they have," noted one analyst.

Italy's third generation licence is due to start at the end of the month, with Belgium and Switzerland planning UMTS tenders in September and November.