Monday, 23 April 2018

UK telcos spend big as 5G spectrum auction raises £1.35 billion

By Chris Kelly, Total Telecom
Thursday 05 April 18

Vodafone, O2 and EE each spent in excess of £300m on 5G spectrum, with Three also spending over £150m

The initial phase of the UK's 5G spectrum has come to a close, with four operators securing 34 lots of spectrum across two bands.  Vodafone, O2, Three and EE all won large amounts of spectrum at the auction, while the fifth qualified bidder, Airspan Spectrum Holdings, walked away with nothing (although they are expected to make more serious bids in the 28GHz spectrum auction, which will be held at a much later date).   The £1.35 billion raised far exceeded the predicted amount of £1 billion – £1.1 billion proposed by a number of analysts in the run up to the auction…

The initial phase of the UK's 5G spectrum has come to a close, with four operators securing 34 lots of spectrum across two bands. 

Vodafone, O2, Three and EE all won large amounts of spectrum at the auction, while the fifth qualified bidder, Airspan Spectrum Holdings, walked away with nothing (although they are expected to make more serious bids in the 28GHz spectrum auction, which will be held at a much later date).  

The £1.35 billion raised far exceeded the predicted amount of £1 billion – £1.1 billion proposed by a number of analysts in the run up to the auction. 

"This spectrum will be instrumental in further improving 4G mobile services now, while helping the UK to lead the 5G revolution and build a Britain that is fit for the future. We hope that it can now be deployed as soon as possible for the benefit of consumers right across the UK," said the UK's digital minister, Margot James.

 

Vodafone

Vodafone secured the biggest volume of spectrum of any of the UK's big four operators, netting 50 MHz of 3.4 GHz spectrum at a cost of £378,240,000. Kester Mann, principle analyst for operators at CCS insight believes that Vodafone will be pleased with this outcome, as it looks to invigorate its mobile offerings in the UK. 

“Vodafone will 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," he said.

 

O2

O2 also secured a large amount of spectrum in both the 4G and 5G bandwidths. O2 secured all 40 MHz of the available 2.3 GHz spectrum, at a cost of £205,896,000 and 40 MHz of 3.4 GHz spectrum at a cost of £317,720,000.

“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 Telefonica some clarity over its intended IPO for the network," added Mann. 

 

EE

EE claimed 40 MHz of 3.4 GHz spectrum at a total cost of £302,592,000. The company focussed all of its effort on acquiring 5G spectrum, and this strategy looks to have laid the groundwork for EE to be a major player in fifth generation mobile services in the years to come.  

“EE’s 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," added Mann. 

 

Three

Three won 20 MHz of 3.4 GHz spectrum at a cost of £151,296,000 – a not insignificant sum, but one that will do little to catapult the mobile operator to the front of the queue for 5G services. Following it's legal challenge to Ofcom's proposed spectrum cap in the run up to the auction, analysts were surprised not to see Three spend more in this auction. 

“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," added Mann. 

 

The next phase

Now that the initial phase of the auction is complete, Ofcom will proceed to the assignment phase of the process. During the assignment phase, operators who have won spectrum can bid to determine where in the frequency bands their new spectrum allocations will be. 

Following the conclusion of this stage, Ofcom will issue the winning bidders with licenses, so that they can begin using their new spectrum allocations right away.  

“This is good news for everyone who uses their mobile phone to access the internet. 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,” said Philip Marnick, Spectrum Group Director at Ofcom.

 

 

 

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