A newspaper has reported that Telekom Austria has agreed to pay around 1 billion euros for new telecoms spectrum. It will happen in an auction that will net around 2 billion euros for the government.

Austria's WirtschaftsBlatt said 700 million euros will be paid by Deutsche Telekom's (DTEGn. DE) T-Mobile Austria. Moreover, Hutchison Whampoa's H3G will be handing over 300 million.

The Austrian telecoms regulator said not to provide any information ahead of a news conference at 1600 GMT on the issue. A capital hike would be triggered by such a high price at Telekom Austria. It had been expected to spend between 300 million euros and 400 million on the auction. It is likely to slow the operators' ability to stay invested in building networks based on the new frequencies.

But, it is important for the country's three operators to take part in the auction in a bid to offer fourth-generation mobile broadband to speed up to 10 times than currently available.

"Operators are likely to gorge on frequencies because the volume of data is growing so rapidly. Videos are going to explode and this is posing a gigantic challenge to the networks", said Telekom Austria Chief Executive Officer Hannes Ametsreiter.