Some of the 700MHz spectrum going under the hammer in Australia could go unsold due to high reserve prices, reports said.
According to local media, the high reserve price for nationwide digital dividend spectrum may well discourage Telstra and second-player Optus. Vodafone Hutchison Australia has already indicated that it might not enter 700MHz bidding.
Under the terms of the Australian auction commencing this week, both 700MHz and 2.5GHz licences, valid for 15 years, are up for grabs.
The 700MHz frequency band is to be offered on a national basis, split into nine lots of 2x5MHz. The reserve price, set by the Australian Communications and Media Authority (ACMA) – under direction of the telecoms minister – is AUD$1.36 ($1.40) per MHz per population in this band.
Under auction rules, each telco can bid for up to 2x25MHz of the 700MHz spectrum available, which would cost A$1.56 billion at reserve prices.
The cost of snapping up the remaining 2x20MHz would be less, at A$1.25 billion, but paying that much – according to a recent Moody’s report, quoted by local media – would still likely put a dent in the credit ratings of both Telstra and Optus.
Reserve prices for the 2.5GHz frequency band, split into 14 lots of 2x5Mhz, are set at a much lower A$0.03 per MHz per population.
ACMA anticipates the auction will run over several weeks, with auction results known by May.
Each of Australia’s big-three network operators offer commercial LTE services using existing spectrum assets.