The UK’s four existing operators shared the spoils in the country’s maligned spectrum auction, with Telefonica UK securing extra airwaves for 4G and Vodafone winning the largest allocation of 5G-ready spectrum.
In the 3.4GHz band, earmarked for the country’s 5G services: Vodafone UK won 50MHz for £378 million; market leader EE and O2 parent Telefonica UK both won 40MHz for £303 million and £318 million respectively. CK Hutchison’s 3UK – which launched repeated legal bids contesting the rules of the auction – paid £151 million for 20MHz.
Telefonica UK was also allocated the complete lot of 4G-suitable spectrum being auctioned, paying £206 million for 40MHz in the 2.3GHz band.
As the country’s largest existing holder, EE’s bidding was limited by the controversial spectrum caps imposed in the auction rules.
In total, regulator Ofcom secured £1.4 billion from the country’s four existing operators. Ofcom said the principal stage of the auction was now complete and it would assign specific segments of spectrum in the coming days.
The other bidder, Softbank-backed Airspan Spectrum Holdings failed to win spectrum in either band. A fifth potential bidder, Connexin, dropped out of the process before the auction began on 20 March.
The auction was originally due to be conducted in 2017, but was delayed after EE and 3 contested the spectrum caps imposed by Ofcom. While EE argued there should be no cap at all, 3 – the country’s smallest operator – said the caps were too high and didn’t do enough to address competition concerns.
Courts ruled in favour of the regulator in December 2017, with a subsequent appeal by 3 rejected in February.
CCS Insight principal analyst Kester Mann said O2 was the “big winner” as it added “much needed” 4G capacity, but added the outcome was less positive for 3 as it did little to improve its “precarious market position.”
“Having campaigned tirelessly for more favourable conditions, it was surprising not to see it spend more,” he noted, adding: “It will be particularly disappointed to miss out on the vital 4G airwaves to support its data-hungry customers. 3 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.”