Connect with us


The 5g Spectrum Auction Netted Just £1.3 Billion For The UK Government

The UK’s newest spectrum auction fell short of analysts’ forecasts, netting just £1.36bn for the Treasury as heavily indebted mobile operators fought a bidding war to boost their national 5G networks. The auction result, announced by media and telecoms regulator Ofcom, is just above the £1.1bn reserve price and a fraction of the £22.5bn raised in the UK’s 3G auction at the turn of the century when the mobile industry was in the growth phase.

While the previous 5G sale in 2018 raised £1.35 billion, some analysts predicted this auction could fetch more than £2.5 billion. Karen Egan, an analyst at Enders Analysis, said: “While the results of this auction are a very positive surprise for operators – almost all of whom are experiencing something of a cash crunch – the Treasury will be disappointed that returns are around half of what they might expect. “

For four UK mobile operators, the sale will provide crucial capacity as they look to expand their 5G networks. Spectrum is a critical resource for the mobile phone industry because it determines the speed and capacity of a carrier’s wireless network. Historically, lower band frequencies have been more powerful for mobile phone services, but higher bands can be used for 5G, meaning networks have had to expand their spectrum.

The last auction was originally supposed to take place last year, but the pandemic delayed it. The government’s move to eradicate mobile ‘no spots’ in rural areas also necessitated a change in the auction process. Ultimately, the auction went smoothly thanks to what one company representative called a “sweet match” between what each network needed to fill its spectrum position and what was on offer.

The need to demonstrate financial discipline due to strained balance sheets has also reduced the temptation for stronger networks to try to play the auction game by raising prices to hurt competitors or buying spectrum to accumulate, as they did in the past. BT, which owns EE, and Telefónica’s O2 were the biggest spenders in the latest 5G sale, as both companies spent around £450m to strengthen their spectrum positions. The groups acquired spectrum in the lower 700 MHz band, which was previously used for broadcasting television signals, and in the higher frequencies of 3.6-3.8 GHz.

The two companies, the UK’s biggest mobile networks, had the most losses during the auction. The 5G sale is the first of a series of hurdles for BT’s management in the coming months. Its shares rose 4 percent to 149p as an investment in a new spectrum turned out to be cheaper than some analysts had feared. O2, meanwhile, is in the final stages of merging with Virgin Media to create a stronger competitor to BT in the 5G and fiber broadband era, meaning it could afford to lose a potentially important spectrum. The company, which hopes to widen its mass-market appeal in the 5G era, has spent £280m to strengthen its position in low-band, which should boost the strength of its network.

Read more – In The Uk, A 5g Spectrum Auction Raises 1.23 Billion Euros

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Recent Comments

Recent Posts