Govt rejects Vodafone's $594m bid for spectrum

Vodafone's half a billion dollar offer for a slice of the 700 MHz spectrum it declined to bid for in the Commonwealth's 2013 spectrum auction has been knocked back by the government, which will take the unsold spectrum to auction instead.

Telstra, Optus and TPG purchased a combined $2 billion of the 700 MHz and 2.6 GHz bands on sale in the auction, leaving 30 MHz of the 700 MHz on offer - around $1 billion in value - sitting with the government.

Vodafone declined to participate in the auction at the time, and the government was unable to sell the spectrum outside of auction in the following two years.

However, in May this year Vodafone offered the government $594 million for 2 x 10 MHz of the leftover spectrum.

The government asked the market for its reaction to the "unsolicited offer", and received angry responses from rival telcos who claimed Vodafone was trying to buy the spectrum outside a competitive process and at below market rate prices.

The Communications Department today said it had decided to reject the offer after other telcos indicated "strong interest" in the spectrum, and will instead take the 2 x 15 MHz of unallocated 700 MHz to auction.

The Australian Communications and Media Authority (ACMA) will conduct the auction, after the government gives it directions on reserve prices and allocation limits.

The government said the auction would take place early next year.

Vodafone said it was advised of the government's decision today and was considering its options.

Telstra and Optus have utilised their 700 MHz spectrum for their respective 4G networks, given its ability to maintain data signals more reliably over long distances.