UK spectrum auction raises £1.35bn

UK comms regulator Ofcom has announced the outcome of the principal stage of its auction to release airwaves for 4G mobile and future 5G services.

It has been running an auction of spectrum in two frequency bands: 2.3 GHz, which is usable by current mobile phones and will help improve 4G capacity for today’s mobile users; and 3.4 GHz, which is one of the spectrum bands earmarked for 5G, the next generation of mobile technology. The principal stage involved 34 ‘lots’ of spectrum being made available across the two bands.

With the principal stage of the auction now complete, Ofcom has confirmed the amount of spectrum won in the principal stage by each company.

  • Airspan Spectrum Holdings Limited has not won spectrum in either band.
  • EE Limited has won 40 MHz of 3.4 GHz spectrum at a cost of £302,592,000 (€345,716,252).
  • Hutchison 3G UK Limited has won 20 MHz of 3.4 GHz spectrum at a cost of £151,296,000.
  • Telefónica UK Limited has won all 40 MHz of 2.3 GHz spectrum available, at a cost of £205,896,000; and 40 MHz of 3.4 GHz spectrum at a cost of £317,720,000.
  • Vodafone Limited has won 50 MHz of 3.4 GHz spectrum at a cost of £378,240,000.

The total value of the principal stage is £1,355,744,000, with all money raised from the auction to be paid to HM Treasury.

Ofcom will now move to the ‘assignment’ stage, which is the last bidding stage of the auction. This is a short process, which allows companies who have won spectrum in the principal stage to bid to determine where in the frequency bands their new spectrum will be located.

After the end of the assignment stage, Ofcom will issue the winning bidders with licences to use the relevant spectrum within a few days, allowing them to begin putting it to use. It expects to publish the final auction results shortly after.

“This is good news for everyone who uses their mobile phone to access the Internet,” asserted Philip Marnick, Spectrum Group Director at Ofcom. “As a nation we’re using ever more mobile data on smartphones and mobile devices. Releasing these airwaves will make it quicker and easier to get online on the move. It will also allow companies to prepare for 5G mobile, paving the way for a range of smart, connected devices.”

According to Kester Mann, Principle Analyst, Operators at CCS Insight, Telefónica’s O2 emerged as the big winner, sweeping up all of the crucial 2.3GHz airwaves that can immediately offer much-needed 4G capacity. “As the most spectrum-constrained operator, this sale was more crucial to O2 than any of its rivals and the result gives it the certainty to continue its mobile-centric strategy in the UK market. It will also give parent Telefónica some clarity over its intended IPO for the network,” he suggested.

“Vodafone will also be satisfied with the outcome, spending the most on 5G spectrum. This re-enforces its renewed long-term commitment to the UK market following several years in the doldrums. It still has plenty to do to turn its fortunes around, but today’s news will boost long-term efforts to regain lost momentum.”

“The outcome for Three will do little to improve its precarious market position. Having campaigned tirelessly for more favourable conditions, it was surprising not to see it spend more. It will be particularly disappointed to miss out on the vital 4G airwaves to support its data-hungry customers. Three remains sub-scale and without fixed-line assets in a market gradually moving towards multiplay services and today’s outcome will do little to dampen doubts over its long-term future.”

“EE’s strong spectrum position meant that it was unable to bid for the 4G airwaves. Its spend on 5G spectrum will support a strategy to launch commercial services in 2020. EE appears well-positioned to be among Europe’s pacesetters in 5G, backed by an already well-established 4G network.”

“The overall spend at nearly £1.4 billion was higher than expected and reflects a hugely competitive sale, with the frequencies vital to helping formulate each network operator’s long-term strategy. Attention now moves to the 700MHz sale – another 5G band that is vital for wide-area coverage – that could be auctioned in the UK as soon as next year,” he concluded.

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