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* Proposes auction process to start in 2014
* Early auction could put pressure on balance sheets
* Telecom operators had asked for delayed auction
By Harro Ten Wolde
FRANKFURT, June 24 (Reuters) - Germany's telecoms regulatorwants an early auction of mobile frequencies to make sure demandfor growing wireless services is being met, despite oppositionfrom cash-strapped operators in Europe's biggest mobile market.
In a document published on its website on Monday, theregulator said it was planning to start the auction process forthe 900 MHz and 1,800 MHz frequencies, currently licensed tohandle voice calls, from 2014.
That is almost three years before the current licencesexpire, at the end of 2016.
Deutsche Telekom, Vodafone Germany, KPN and Telefonica Deutschland had asked theregulator for an extension of their 900 MHz and 1,800 MHzlicences until 2018 or later.
All argued a potentially expensive auction should be delayedbecause they needed financial firepower for investments in theroll-out of super-fast mobile networks, known as 4G or LTE.
Last year an auction of 4G wireless frequencies yielded 3.8billion euros in the Netherlands, with prices so high thatmarket leader KPN said it would have to cut its dividend.
The German regulator said on Monday it would also add 700MHz spectrum to the auction, currently in use by radio andtelevision broadcasters as well as spectrum in the 1.5 GHz band.
The auction could put pressure on the balance sheets of theoperators, especially KPN and Telefonica Deutschland, the twosmaller players.
"An early auction would mean a cash drain for the operators,who are in the middle of some heavy investments in the rolloutof a LTE network," said a fund manager who holds shares in allfour operators.
The manager, who declined to be identified, said an auctioncould also lead to new talks about network sharing betweenoperators in the German market because KPN and Telefonica mayrealise they need to team up to keep up with the market leaders.
KPN and Telefonica held talks about a merger of their Germanactivities in 2012 and have also discussed network sharing toreduce costs. But Markus Haas, Telefonica Deutschland's chiefstrategy officer, said no talks were currently being held.
Operators have until October to submit their opinion aboutthe regulator's plans. A final decision will be made early nextyear.
Deutsche Telekom shares closed down 1.9 percent, whileTelefonica Deutschland lost 1.5 percent, slightlyunderperforming a 1.3 percent lower telecom index. KPNshares lost 3.4 percent in Amsterdam. Shares in Vodafone, whichhas agreed to buy Germany's largest cable operator KabelDeutschland, rose 0.3 percent in London.
