Telstra asks Treasury to cap spectrum prices at $3.9 billion

Telstra has asked the federal government to cap the price of spectrum licence renewals at $3.9 billion sector-wide after accusing the communications regulator of overvaluing the assets.

In an urgently-prepared pre-budget submission to the Treasury, Telstra said that the Australian Communications and Media Authority (ACMA) had erroneously overvalued the licences by $3.3 billion on an industry-wide basis, putting the digital economy and productivity at risk.

On this basis, Telstra is individually facing a $1.3 billion overcharge for its holdings.

Telstra is seeking an industry valuation for the spectrum assets of $3.9 billion compared to the ACMA’s latest pricing guidance of up to $7.2 billion.

For Telstra, that would translate to a $1.4 billion individual carrier renewal fee as opposed to $2.7 billion under the ACMA’s preferred pricing.

The carrier then repeated its warning that it would have to make “difficult trade-offs” when assessing its future investment in mobile networks if it was forced to pay the extra cost.

“Telstra supports paying a fair price for spectrum, but ACMA’s latest pricing proposal for expiring spectrum licence renewal is dramatically above global norms and is in conflict with the Government’s productivity agenda," Telstra stated in its submission.

"To deliver the productivity-enhancing connectivity Australia needs, the telecommunications industry needs certainty of spectrum allocation on fair terms.

“ACMA’s approach to pricing is flawed and puts ongoing investment in jeopardy. If the proposal were implemented, the additional cost would be $3.3 billion for the industry and $1.3 billion for Telstra above the market value of the spectrum according to independent analysis that corrects flaws and errors in the ACMA’s analysis."

ACMA told iTnews that it would welcome any evidence from stakeholders to challenge its price modelling methods.

"ACMA is publicly consulting on its updated peer-reviewed methodology to establish a fair market price for expiring spectrum licences, and welcomes submissions with evidence and modelling,” a spokesperson for the regulator said.

Source close to the matter told iTnews that the pre-budget submission by Telstra was an extraordinary step and indicated the degree of its concern about the potential impact on the digital economy if ACMA goes ahead with its pricing model.

Carriers were already facing an estimated fee hike of up to $2.3 billion last December.

At the time, ACMA released fresh guidance updating its calculations it had previously provided to industry through its consultation process that revalued the licences from between $5 billion and $6.2 billion up to $7.3 billion.

Commenting on the revaluation last December, ACMA chair Nerida O’Loughlin said the new total cost estimate reflected “market value”, based on new benchmarking data.

However, pointing to the example of the UK communications regulator, Ofcom, which has set prices half those ACMA seeks for low-bands and 30 to 40 percent lower for midbands, Telstra said that Australia’s spectrum revenue expectations were out-of-step with international norms.

“ACMA’s preferred position on expiring spectrum licenses is inconsistent with well documented global pricing trends.

"Other jurisdictions are taking into account the declining value of spectrum in setting prices for this resource,” Telstra said.

Telstra isn’t the only mobile network operator to protest against ACMA’s preferred pricing model.

A spokesperson for Australia’s second largest carrier, Optus, last week joined Telstra in expressing concern that ACMA’s pricing model could lead to investment trade-offs.

“Spectrum is a public asset, and industry reasonably expects to pay for access. However, the scale of that cost has a direct and material impact on how much can be invested back into the network for Australians and can place upward pressure on customer price," Optus’ spokesperson said.

“These are real‑world trade‑offs that affect how quickly we can expand satellite connectivity in regional Australia and advance future technologies such as 6G, AI and cloud capabilities."

Optus was responding to a position paper that consumer advocacy group the Australian Consumer Communications Action Network (ACCAN) released last week proposing that the government force carriers to pay to fill regional service coverage gaps in exchange for discount spectrum licences.

In the paper, ACCAN said that ACMA's preferred pricing model to renew rather than competitively auction the licences would shave at least $900 million off their original cost of $8.2 billion.

It said that carriers should be forced to use savings to invest in remote and regional blackspot infill.

Australia’s top three network operators have been clear and united in their responses condemning the ACCAN’s proposal.

Additionally, telco industry lobby, the Australian Telecommunications Alliance, said that the proposal would make it harder for carriers to deliver faster and more reliable mobile broadband services.

“Australians want more investment in mobile networks – ACCAN wants higher taxes that’ll be paid for by consumers. Higher spectrum taxes mean less investment, or higher prices or both,” ATA chief executive Luke Coleman said.

Telstra said that over the seven years to June 30, 2025 it had invested $12.4 billion in its mobile network, including $4.7 billion in its regional areas.

Optus said that since 2001 it had invested $33 billion “to transform our business and evolve our networks from 3G to 4G and now 5G, delivering faster speeds, better reliability, and wider coverage for customers across Australia.”

To put the additional $1.3 billion cost for licences in practical terms, Telstra said that it could pay salaries for nine percent of its workforce for three years or fund the replacement of its entire intercity fibre network – a program of work that is ordinarily only undertaken on a 40-year cycle.

ACMA has given stakeholders to lodge submissions on its preferred pricing model by February 27.