OFCOM, the telecoms regulator, is considering handing Britain’s mobile phone companies an indefinite extension of their third-generation (3G) licences in a tacit acknowledgement that the £22.5 billion they paid four years ago was too high.

The concession is part of a deal that Ofcom is mulling as it seeks to alleviate operators’ concerns that new 3G licences will be sold off too cheaply, The Times has learnt.

The new licences will be auctioned by the regulator in 2007, when several new 3G networks will be made available.

The main mobile operators, Vodafone, Orange, mmO2 and T-Mobile, which paid billions for their 3G licences during frenzied bidding in 2000, fear that new entrants to the market could snap up the licences at a fraction of the price that was paid for the original ones.

The existing licences were supposed to last for 21 years. In 2021 the mobile phone companies are due to hand the licences back to the Government and rebid for them, although these plans have not yet been finalised.

Ofcom is understood to be sympathetic to the phone companies’ concerns.

In a document that is due to be published this month, the regulator will look at various options both for the second 3G auction and for the renewal and extension of the existing licences.

An indefinite extension of the licences is one option that is set to be raised in the document.

None of the UK mobile players has seen a return on the £22.5 billion investment made into 3G.

Two operators, mmO2 and T-Mobile, have already been forced to write down their investment. The technology has taken far longer than expected to develop.

An indefinite extension of the licences would be a recognition by the Government that the operators overpaid for them at the height of the technology boom in 2000. Originally ministers had expected to receive no more than £5 billion in the auction.

Extending the licensing agreements could strengthen the balance sheets of the mobile phone operators and create a secondary market for the licences.

At the moment, the companies are planning to write down part of the price of the licence every year until 2021.

If the licences were awarded to the companies permanently, however, they would, in effect, become a tradeable asset with a stable value, like a freehold property.

The new band of spectrum that will be made available for the new 3G networks will operate at frequencies around 2,500 MHz.

A spokesman for Ofcom said: “There are endless ways in which you can allocate spectrum. You can gift it for free, or you can auction it.”

He added that no fixed position had been taken on licence renewal.

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