Austrian operator Mobilkom lost its bid for the country’s third 3G licence Wednesday as it was outmanoeuvred by Telefonica, or more specifically its subsidiary, O2 Slovakia.

Telekom Austria (TA), Mobilkom’s parent, decided to fold and walk away from the Serbian government’s re-privatisation auction of mobile operator Mobi63 on Monday, after the asking price passed what TA CEO, Boris Nemsic, called “value accretive” levels.

Following the Telefonica win, Nemsic’s office issued the following statement: “Slovakia would have been a window of opportunity in addition to the expansion strategy that we have announced. The acquisition of a third mobile license would have represented a good opportunity to benefit from the economic growth and the favourable framework conditions present in the Slovakian mobile communications market. However, we will continue to focus on the expansion of our business in South-East Europe.”

Despite the result, according to as yet unconfirmed sources, Telefonica was by no means the highest bidder, staking Eur3.94m. However, the Slovak authorities concluded, according to Slovak Radio, that its bid offered the greatest degree of competition. Telefonica already owns a network in the neighbouring Czech Republic.

Mobilkom has been expanding aggressively in Austria’s central and south-eastern European backyard for the last 10 years, going from a smallish PTT to a major player in the so-called “reform states”. This week’s news, however, will see one of its biggest ambitions in the region taking a stinging setback.

Nemsic has long been keen to get into the Serbian market, and Mobilkom has long hoped to acquire the first operator in Serbia, Mobtel. In the late 1990s, Mobtel was privatised in a controversial transaction which saw it being sold to a group of Austrian businessmen with close ties to the conservative Austrian People’s Party.

More recently, after the revolution which deposed Slobodan Milosevic, the Serbian government disputed the validity of the sale. Despite a complicated legal spat between the new owners, the Serbian post office and a rival Russian bidder, Mobilkom simply planned to acquire the business from whoever turned out to own it.

Eventually, Mobtel was re-nationalised under the name ‘Mobi 63’ with a view to putting it back on the market.