Surprise outcome in Norwegian spectrum auction

09 December 2013 |

Norwegian mobile operator Tele2 has failed to secure any additional 3G and 4G spectrum in Norway’s auction.

Rivals TeliaSonera and Telenor secured spectrum in the 800MHz, 900MHz and 1800MHz bands, alongside an unknown new entrant, Telco Data.

The auction started last week and the Norwegian Post and Telecommunications Authority (NPT) is expected to conclude the sale today before determining specific frequencies.

The NPT carried out a first price sealed-bid auction, which sees bidders write a number down in an envelope, with the highest bidder winning and paying the amount they specified.

Graham Friend, managing director at Coleago Consulting, said that Tele2’s shock failure at the auction could be due to “shading”, where a company bids less than the value it places on the spectrum.

“Tele2, as the smallest player in the Norwegian market, may well have taken the view that they only needed to outbid a new entrant, and that a new entrant would have had a very low valuation,” Friend explained.

“As a result, Tele2 may have decided to shade very aggressively, in the hope of securing spectrum at a low price, thus creating significant value. The combination of very aggressive shading from Tele2 and a supercharged new entrant business case is likely to have generated the upset.”

Despite the unexpected outcome, Tele2 has reassured customers that business will continue as usual.

“Nothing changes for our customers – we still have the same mobile network as we had yesterday and we will continue to be the challenger in Norway,” said Arild Hustad, CEO at Tele2.

Hustad also confirmed that it had gained valuable knowledge from the auction and will look to secure resources in the 1800MHz band, which has three blocks of spectrum left unallocated after the sale.