BERLIN -- Shareholders of major European telcos cheered when Italy's auction for third-generation wireless licenses came to an abrupt and rather affordable end Monday, as the

Blu

consortium backed by

British Telecom

(BTY)

dropped out. But not all the successful bidders are guaranteed an easy ride.

The five remaining bidders look set to add only around $10 billion to the government's coffers -- far below the $35 billion seen in the U.K. auction and the $46 billion achieved in the German contest. That was enough to cause the shares of the winners to soar Monday, as it appeared they would get 3G licenses on the cheap.

Shares of Spain's

Telefonica

(TEF) - Get Report

, which backed the

Ipse

consortium along with Finnish partner

Sonera

(SNRA)

, rose 2.1% to 21.90 euros in Madrid, and Sonera climbed 13% to 24.80 euros in Helsinki.

But Blu's departure may not be the blessing it appears. Some believe Telefonica and Sonera would have benefited if Blu hadn't pulled out and Ipse had actually had to pay more for their license. That's because the four incumbent Italian wireless operators, including Blu, were expected to get licenses and newcomer Ipse was favored to grab the fifth. But Blu's departure opened the door for another newcomer to Italian wireless.

Andala

, backed by

Hutchison Whampoa

(HUWHY)

, has entered the fray, and that means more intense competition for new customers.

"One could argue Telefonica would have been better off if Blu had stayed in" and Andala had dropped out, says Matthew Lewis, a London-based analyst for

Daiwa Securities

. Lewis points out it will be many years before UMTS (universal mobile telecommunications systems) will offer immensely better service than updated GSM (global system for mobile communications) networks, which are often called 2.5G. More importantly, Blu's not going away. Instead it will now have every incentive to invest in its network and hold on to its customer base, thus giving Italy six rivals angling for market share for at least the next five years. "It's a double-edged sword: Telefonica will pay less for the license, but there will now effectively be more competition," Lewis explains. Daiwa does not have an investment-banking relationship with Telefonica.

Ipse is only paying $2 billion for an Italian license compared to the $8 billion Telefonica and Sonera paid together in the German auction, but that cheapness belies the challenge of starting Italian wireless operations from scratch. As in Germany, neither company has a local GSM wireless infrastructure upon which to build a UMTS network, and, besides beating out Andala, Ipse will have to try to claw customers away from

Telecom Italia Mobile

(TI)

and

Vodafone's

(VOD) - Get Report

Omnitel

. The two have 90% of all Italian cell-phone users.

Also, the rise in Telefonica and Sonera share prices may stem from something other than the relatively cheap acquisition of G3 licenses in Italy. Both companies are now considered choice prey in the wake of their surprising success in the German G3 auction this summer. The Italian license, no doubt, will help fuel that speculation.

British Telecom and

Deutsche Telekom

(DT) - Get Report

are possible predators. The massive former monopolies have struggled to develop their European wireless strategies, and either may see Telefonica and Sonera as possible solutions -- especially because both aim to get a G3 license in France, too.