LONDON -- No more callers, please. We have the winners.

The auctions for licenses to build and operate U.K. third-generation mobile phone services finally wrapped up Thursday. Cable company

NTL

(NTLI)

and its backer

France Telecom

(FTE)

decided enough was enough and pulled out.

The remaining players are

TIW UMTS

-- owned by

Hutchison Whampoa

(HUWHY)

and Canada's

Telesystem International Wireless

(TIWI)

-- and the four incumbent operators:

Vodafone AirTouch

(VOD) - Get Report

,

Orange

,

Deutsche Telekom's

(DT) - Get Report

One2One

and

British Telecom's

(BTY)

BT Cellnet

.

The total amount paid for the licenses was 22.5 billion pounds ($35.4 billion), which the British government will use to pay off some of the national debt. The new system, known as universal mobile telecommunications system (UMTS), will allow the license holders to develop and market mobile high-speed data services.

While most agree the amount paid by the operators was far in excess of what was predicted before the auction kicked off at the beginning of March, there remains some doubt as to whether it would be strictly correct to call Vodafone, et al, winners in any real sense of the word.

As Rodrigo Parreira, a senior consultant with

Cluster Consulting

, recently wrote for

TSC UK

: "UMTS presents huge potential in terms of value generation for mobile operators, but the risks involved are also very high."

But risks are something Canning Fok, managing director of Hutchison, knows all about.

"This was the same question I was asked when I set up Orange back in 1993. I sold Orange this year to Mannesmann for 22 billion pounds and this business is more valuable than second generation," Fok said at a news conference Thursday.

TIW UMTS reckons that to build the infrastructure required to take full advantage of the spectrum it has bought, it will need to spend 5 billion pounds, which together with the 4.4 billion pounds it spent on the license, gives it an investment of nearly 10 billion pounds. If TIW UMTS achieves the 4 million subscribers it hopes, it says it will break even within five years.

That is a lot of ifs, though. The nature of the agreement between Telesystem and Hutchison means that most of those risks reside with the latter, and as such, Telesystem, whose stock was up 1 1/2, or 5.2%, at 30 1/4 in the wake of the news, actually may be a winner in the truer sense of the word.

A 3-G Sugar Daddy

There was little chance of Telesystem being able to afford the license on its own, so it required the backing of a financial heavyweight. Luckily for Telesystem, Hutchison was unable to register to bid in the auction on its own in January because it was in the midst of trying to help Mannesmann, which had just bought Orange, in its fight to fend off the hostile attentions of Vodafone. Had Hutchison signaled its intention to bid for a license in the U.K., that could have been taken as a sign that it was deserting Mannesmann in its hour of need.

With Vodafone finally winning out, Hutchison could turn its attentions to getting in on the third-generation act, and found Telesystem willing and able.

The two companies announced today that they have set up a subsidiary, which owns the license and will be responsible for operating and managing the network needed to run the services. This subsidiary is 9.9% owned by Telesystem and 90.1% owned by Hutchison. To pay for the investment, the venture has secured financing, backed by Hutchison, from

Chase Manhattan

and

HSBC

.

Although TIW was still unclear Thursday exactly how the subsidiary will operate, there will be arrangements made between it and the two companies' other subsidiaries, such as Telesystem's

Dolphin

mobile service, which operates in the U.K.

As Peter Rhamey of

Nesbitt Burns

noted in a recent research note: "There would be considerable synergies with respect to Dolphin's operations (infrastructure, sales and back office) and its customer base."

Furthermore, should Hutchison become more committed to the success of Dolphin, it could help Dolphin speed up its buildout plans before the third-generation services are rolled out.

Rhamey rates Telesystem an outperform. Nesbitt Burns has no investment banking relationship with the telco.

Hutchison's Fok certainly seems pleased with his newfound Canadian friends. He stated his intention today to bid for 3-G licenses in Germany and France, with Telesystem if it is willing. "Once a partner, always a partner," Fok claimed.

By hitching itself to a company that managed to turn Orange into gold, that must be music to the ears of Telesystem.