Seven companies have been given regulatory approval to take part in the UK’s 4G spectrum auction next month.
British fixed line incumbent BT, Hong Kong conglomerate PCCW and managed services provider MLL Telecom will join the country’s four mobile…
Seven companies have been given regulatory approval to take part in the UK’s 4G spectrum auction next month.
British fixed line incumbent BT, Hong Kong conglomerate PCCW and managed services provider MLL Telecom will join the country’s four mobile operators when they bid for 800MHz and 2.6Ghz frequencies.
BT has previously expressed interest in acquiring 2.6GHz frequencies to bolster its wi-fi offering. PCCW, which owns local telecoms solutions provider UK Broadband, has already rolled out a version of 4G in a higher band called TD-LTE in limited deployments. The entry of MLL Telecom, a Buckinghamshire-based group best known as a networks provider for the public sector, will perhaps come as most of a surprise.
The auction itself will be fierce as operators EE, Vodafone, O2 and 3 clamber for additional frequencies to address an insatiable demand for mobile broadband.
James Walsh, head of telecoms at law firm Eversheds, believes the higher number of 4G bidders will help raise more for government coffers.
“The good news for the government is that having seven bidders should help to maximise revenue from the auction,” said Walsh.
Revenue generator
Hopes that the 4G sale could generate a windfall for the Treasury were already fuelled by successful auctions in other countries.
Mobile operators in the Netherlands paid a total €3.8bn for the country’s 4G spectrum earlier this month, easily surpassing expectations of around €450m. In Ireland a month before, operators overcame a challenging economy to generate €854m.
Following these two auctions, Brian Potterill, PwC’s director of telecoms strategy, said he now expected the UK’s 4G auction will raise the high-end of his previous £2bn-£4bn estimate.
Despite many operators finding it increasingly difficult to boost returns from mobile data, he said demand for capacity was showing no sign of relenting.
Telecoms regulator Ofcom has placed a reserve price of £1.3bn on the 4G sale but the Government’s tax and spending watchdog this month estimated a £3.5bn boost to the public finances.
However, industry analysts at Ovum have cautioned against speculating on how much the UK could raise through the 4G sale.
Its regulation analyst Matthew Howett said: “Trying to guess how much money a spectrum auction can raise is a bit of a fool’s game.
“It depends on bidding strategies and you don’t know how people will behave when they go into an auction.
“We were all taken by surprise when the Government came out with the £3.5 billion value. If they wanted to include any value it should probably have been the reserve price Ofcom has set of £1.3bn.”
4G licences will be awarded in March 2013, with commercial services starting in May and June.
