A European Telecom

The Company

A European Telecom
One of Europe's largest communications companies, this global firm provides a range of fixed-line and wireless voice and data services. The company's mobile phone unit has 20 million subscribers in France and another 27 million in other European countries.

The Challenge

In 2000, a number of European countries conducted serial auctions for licenses to provide 3G (i.e., advanced digital) services to mobile phones. The company wanted guidance on how much to bid in key countries in which it wanted a stake in the market. Early indications were that bids could exceed billions of Euros, so excessive bids could pose dire financial consequences.

The Solution

In partnership with Strategy Analytics, StatWizards consultants built discrete-choice models for 3G demand in a number of European countries. The model allowed the company to evaluate the potential market and willingness to pay for these services.

Results Achieved

The company quickly discovered that bids in early auctions far exceeded the potential returns even under optimistic scenarios. This led to the realization that some competitors were artificially driving up bids in early auctions in a beggar-thy-neighbor strategy that would hobble the ability of winners to participate in later auctions. The company was able to moderate its bid strategy to focus on the licenses it really wanted.