[Ben]

Bye bye Christmas bonus!


Hopes of clawing £4bn back from the UK Government may have been dashed by a senior European judge

The UK's 3G network operators have suffered a serious defeat in their ongoing attempt to claim back billions of pounds from the UK Government.

The European Court of Justice ruled on Thursday morning that the third-generation mobile auctions, which took place in the UK and Austria in 2000, were not liable for VAT.

Some 3G operators, principally Hutchison — which owns 3 — had argued that the auctioning of the licences was a transaction liable to VAT. As such, the operators could claim back 17.5 percent of their licence fees.

Advocate General Kokott, a senior European judge, has rejected this claim. In an opinion published online on Thursday morning, he said that the UK and Austrian Governments had been acting as regulators when they held the auctions, not economic agents.

Kokott's ruling does not constitute a binding ruling by the European Court of Justice, but according to reports these provisional opinions are upheld in around four out of five cases.

The UK mobile operators stood to win almost £4bn back, having spend £22.5bn acquiring UK 3G licences.

3, which took the case to the European Court, could not be contacted immediately for comment.
It was a pipe dream anyway, IMHO, that they'd be able to make their licences into a VAT-applicable purchase. Maybe the networks will begin to realise that they paid what they paid, and if they can't make that back through selling 3G services then it's their own damn fault. Less time and money spent on these legal persuits can only be a good thing - lets hope concentration now falls on how to make 3G an economic success.

[Hands0n]

Hear, Hear! Totally agree with all of that. They knew what they were getting into, a new network technology, and the price that they were going to have to pay for it. They did not have to bid at the auction, and if they didn't then the government of the day would have had to re-submit to auction and lower prices could have been charged. But the history has been made and they have to live with it.

If they attempt to pass this on to the Customer base it will be a bitter blow against 3G and make matters worse, not better.

My advice would be to sack 90% of their financial advisors, and keep it that way. Extend their ROI to something that is reasonable given the expense that they've laid out - instead of trying to recoup the entire investment in 3 years they should make it 10 or 15 even. I'm sure there are tax angles that they could exploit also, if they have not already. Lets not be too sorry about these crocodile tears.

The focus has, as Ben says, to be on the future of 3G - or it will end up being a millstone round the mobile networks necks.

[3GScottishUser]

This will have been a big dissapointment for all the networks but a real hammer blow for Hutchison who could have done with a lift to offset the heavy investment and high churn in the UK. With more bad news on the way from Ofcom in the form of harmonisation of 3G/2G termination charges the future looks anythng but bright for the UK's only pure 3G network.

I agree with the sentiment that each of the networks bought their ticket and knew the sums they were bidding as the process progressed. Most of them simply bid to protect their exitsing franchise and whilst it was costly and there appears little significant uptake of any 3G services they at least protected the revenues that their millions of customers generate every month.