Virgin and co pull out of 3G auction

SpectrumCo, the consortium including Virgin and Tesco, is one of the latest bidders to pull out of the auction for a third generation mobile licence in the UK.

The venture, which also includes EMI, Sonera and Nextel, withdrew from the race for one of the five licences during this afternoon's bidding. Shortly afterwards, another participant - Epsilon Tele.com, a subsidiary of Japanese bank Nomura - also pulled out.

The total amount bid by the end of round 98 had topped £11bn, with more than £2bn being offered for each licence. Observers estimate that the auction will raise up to £16bn for the UK government.

Following SpectrumCo and Epsilon's withdrawal, just nine of the 13 bidders remain alive in the auction. Of these, five are new entrants to the UK mobile market. US group Crescent pulled out of the race on Monday and Irish telco Eircom, through its 3GUK venture, withdrew this morning.

There are concerns that operators will have spent so much on licences that they will not be able to afford the cost of building networks and customers will end up paying higher fees.

Third generation mobile networks enable high-bandwidth wireless transmissions. Likely services include video, audio and streaming data on the move.