Germanys spectrum auction nets EUR4.38B – Mobile World Live

Germanys spectrum auction nets EUR4.38B

20 MAY 2010

Germany’s high-profile mobile spectrum auction wrapped up yesterday after 224 rounds of bidding, netting the government EUR4.38 billion (US$5.42 billion). The country was selling spectrum in the ‘digital dividend’ 800MHz band, as well as 1.8GHz, 2GHz and 2.6GHz bands. Activity in the 800MHz band was the most eagerly watched, as this spectrum (previously used for analogue TV broadcasts) is ideal for providing coverage over a broad geographic area using relatively few base stations, (although it is less suitable for providing lots of capacity in a congested hotspot). O2 and Vodafone each spent EUR1.2 billion on 800 MHz spectrum while Deutsche Telekom spent EUR1.15 billion. Royal KPN’s E-Plus failed to secure spectrum in this band. According to the German network regulator, Vodafone paid EUR1.42 billion for a total of 12 spectrum blocks, Telefonica paid EUR1.38 billion for 11 blocks, Deutsche Telekom EUR1.3 billion for 10 blocks and E-Plus EUR283.6 million for 8 blocks.  In total, 41 spectrum blocks were sold in the auction, which started April 12.

Much of the spectrum is expected to be used for future deployment of LTE technology in Germany. Indeed, airwaves at 800MHz and 2.6GHz are deemed most suitable for technologies such as LTE, while the other bands can be used to expand existing 2G and 3G networks. The total gain felt short of expectations though, as advisory firm KPMG expected the auction to generate between EUR6 billion and EUR8 billion, while financial analysts estimates ranged from EUR2 billion to EUR8 billion. It also fell well short of the EUR50 billion generated from the sale of third-generation UMTS licenses in 2000. Interestingly, only Germany’s four incumbent mobile operators took part in the auction, after one other company withdrew its interest and another was not admitted. The auction has proved controversial. E-Plus and O2 – the two smaller players – took legal action against the regulator last year, arguing that the auction rules favour T-Mobile and Vodafone as they already own significant spectrum below 1GHz. This action was later rejected by the courts.

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