O2 comes out on top in Ofcom 5G spectrum auction
16 April 2018 | Natalie Bannerman
Ofcom has published the results of its 5G spectrum auction with O2 coming out on top and Three UK having spent the most.
Unsurprisingly the winning bidders include: EE Limited, Hutchison 3G UK Limited, Telefónica UK Limited (which owns O2) and Vodafone Limited.
At first glance O2 seems to come out on top, having secured spectrum in the 2350 – 2390MHz range, the crucial for the deployment of 4G services for £205,896,000. In addition the company also won spectrum required for 5G in the 3500 – 3540MHz range for £317,720,000.
“O2 emerged as the big winner, sweeping up all of the crucial 2.3GHz airwaves that can immediately offer much-needed 4G capacity, commented Kester Mann, principle analyst of operators at CCS Insight. “As the most spectrum-constrained operator, this sale was more crucial to O2 than any of its rivals and the result gives it the certainty to continue its mobile-centric strategy in the UK market. It will also give parent Telefonica some clarity over its intended IPO for the network.
Overall, Vodafone spent the most amount of money for 5G spectrum alone, winning 3410 – 3460MHz license for a total of £378,240,000. In a statement Vodafone said it would use the spectrum to “deploy 5G services, enabling Gigabit speeds and lower latency to enhance applications including connected vehicles and robotics, industrial automated systems, and virtual and augmented reality.”
“Vodafone will also be satisfied with the outcome, spending the most on 5G spectrum,” added Mann. “This re-enforces its renewed long-term commitment to the UK market following several years in the doldrums. It still has plenty to do to turn its fortunes around, but today’s news will boost long-term efforts to regain lost momentum.
EE spent a modest £303,594,000 at a small additional cost of £1,002,000 in order to outbid O2 for its spot in the top 3540 – 3580MHz range.
“EE’s strong spectrum position meant that it was unable to bid for the 4G airwaves. Its spend on 5G spectrum will support a strategy to launch commercial services in 2020,” continued Mann. “EE appears well-positioned to be among Europe’s pacesetters in 5G, backed by an already well-established 4G network.”
Three’s Hutchison 3G UK Limited, appears to have suffered the most having spent an additional £13,133,000 to win spectrum in the prominent 3460 – 3480MHz range. Telecoms.com is reporting that it was a bidding war between Vodafone and Three, that resulted in the extra spend, even going far as to implying that Vodafone drove up the price for fun.
“The outcome for Three will do little to improve its precarious market position,” explained Mann. “Having campaigned tirelessly for more favourable conditions, it was surprising not to see it spend more. It will be particularly disappointed to miss out on the vital 4G airwaves to support its data-hungry customers. Three remains sub-scale and without fixed-line assets in a market gradually moving towards multiplay services and today’s outcome will do little to dampen doubts over its long-term future.”
Ofcom say that there were no withdrawn lot licenses during the process, though back in March, Connexin Limited, the UK fixed wireless company, pulled out of the spectrum auction just days before principle stage of the auction was due to begin.
“The overall spend at nearly £1.4 billion was higher than expected and reflects a hugely competitive sale, with the frequencies vital to helping formulate each network operator’s long-term strategy. Attention now moves to the 700MHz sale – another 5G band that is vital for wide-area coverage – that could be auctioned in the UK as soon as next year,” said Mann.
9h | Jason McGee-Abe
9h | Jason McGee-Abe
10h | Natalie Bannerman
11h | Natalie Bannerman