Sweden: 5G auction opens and closes

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Sweden’s auction of spectrum in the 3.5 GHz band for the development of 5G has opened and closed after just one day.

Sweden’s regulator closed the auction after four rounds of bidding, and the end-result has been described as being “benign” for the telcos involved. The average bidding price was a mere €0.06 per MHz of population, which is a fraction of that bid last week in the US auction of similar spectrum.

All three key networks (Telia, Telenor and Tele2) won their target regions. Telia secured 120 MHz, while the Tele2/Telenor joint venture Net4Mobility and Hi3G each won 100 MHz each.

Total proceeds for the government were SEK 2.3 billion which is some 40 per cent above the minimum reserve price, and thus works out at 5.8 EuroCents per Capita (MHz POP).

Investment bank Jefferies said: “Such an outcome is in-line with our expectations – e.g., we have SEK 800 million for Telia in our published model compared to the actual auction cost of SEK760m. However, this was by no means a foregone conclusion – the earlier 5G auction for the 0.7GHz band in December 2018 ended with one of the highest unit prices observed in Europe in recent sub-1GHz history.”

The bank’s note continues: “Telia’s allocation does not look imbalanced vs Tele2/Telenor considering Telia’s 42 per cent service revenue share vs the combined 44 per cent of Tele2/Telenor. Hi3G wins a whole 100MHz with only 14 per cent market share. This near-equalised distribution among all three Swedish networks reflects the fact that meaningful 5G services require a minimum of 100MHz at 3.5GHz as a starting point according to ITU recommendations. With only 320MHz available, the MNOs evidently decided collectively to settle with an uncontentious equal distribution at a relatively low price rather than, say, Telia or Net4Mobility trying to corner Hi3G which would have risked a bidding war given the technology backdrop. This benign outcome was notably not an industrial policy choice – PTS divided the 3.5GHz spectrum into 16x 20MHz blocks for the purposes of the auction. The 2.3GHz spectrum goes to state-owned Teracom (supplies public authorities and corporates).”


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