UK 4G spectrum sells for less

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UK 4G spectrum sells for less

Political fallout to come.

The British government will reap substantially less than it expected from the auction of 4G  spectrum, a result that could set the tone for Australia's forthcoming sale of adjacent radio frequencies.

In total, the successful bidders for some 250 MHz of spectrum in the 800 MHz and 2600 MHz bands brought in £2.34 billion (A$3.48 billion), which is £1.16 billion less than forecast by the Government.

A weak local economy and uncertain global financial conditions are thought to have driven down bids, which analysts said were a relief to telcos. In comparison, the auction for 3G spectrum in UK fetched £22.5 billion.

Over 50 rounds of bidding took place for the auction, telco regulator Ofcom said, before the winners emerged.

Thse included incumbent BT which bought 2.6 GHz spectrum and Vodafone which bought up big in both available bands.

Winning bidder Spectrum won Base price
Everything Everywhere Ltd 2 x 5 MHz of 800 MHz and
2 x 35 MHz of 2.6 GHz
£588,876,000
Hutchison 3G UK Ltd 2 x 5 MHz of 800 MHz £225,000,000
Niche Spectrum Ventures Ltd (a subsidiary of BT Group plc) 2 x 15 MHz of 2.6 GHz and
1 x 20 MHz of 2.6 GHz (unpaired)
£186,476,000
Telefónica UK Ltd 2 x 10 MHz of 800 MHz
(coverage obligation lot)
£550,000,000
Vodafone Ltd 2 x 10 MHz of 800 MHz,
2 x 20 MHz of 2.6 GHz and
1 x 25 MHz of 2.6 GHz (unpaired)
£790,761,000
Total   £2,341,113,000

Source: Ofcom

There were caveats attached to the spectrum rights auctioned off. Telefonica's winning bid comes with an obligation to provide indoor mobile coverage to 98 percent of the UK population by the end of 2017, Ofcom said.

Bidders who won spectrum in the 800 MHz range — re-farmed as analogue television service closed down — will have to provide free filter fitting for people who experience interference with digital TV broadcasts.

This is expected to cost around £180 million (A$268 million) on top of the auction bids.

The substantially lower-than-expected result from the auction may have political ramifications for the UK's ruling Conservative-Liberal Democrat coalition, Guardian writes.

Britain's Chancellor of the Exchequer, George Osborne, had factored in £3.5 billion from the spectrum auction in his autumn statement last year, to show that the country's budget deficit reduction was on track.

The Australian Government hopes to realise over $3 billion from the auction of 700 MHz and 2.5 GHz spectrum in April this year.

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