The Italian 4G Spectrum Auction: An Analysis

After 22 days and 469 rounds, the 4G frequency spectrum auction in Italy closed on September 29th netting the government over €3.9 billion. By all measures, the auction was a great success with prices exceeding the reserve prices in a country that has not been far from the epicenter of financial turbulence in the Eurozone.

I have summarized the results of the auction in the table below. Four bands were auctioned: 800, 1800, 2000 and 2600 MHz. There were no bidders for the 15 MHz slice in 2000 MHz. However, the other bands fetched higher prices than in comparable auctions in other western European countries.

Band: 800 MHz
Operator Bandwidth

Price (€)

€/MHz-PoP

Wind 2×10 MHz

977,900,000

0.81

Vodafone 2×10 MHz

 992,400,000

0.82

Telecom Italia 2×10 MHz

992,200,000

0.82

Total 60 MHz

2,962,500,000

0.81

Band: 1800 MHz
Operator Bandwidth

Price (€)

€/MHz-PoP

H3G 2×5 MHz

158,900,000

0.26

Vodafone 2×5 MHz

 159,100,000

0.26

Telecom Italia 2×5 MHz

 159,000,000

0.26

Total 30 MHz

 477,000,000

0.26

Band: 2600 MHz FDD
Operator Bandwidth

Price (€)

€/MHz-PoP

Wind 2×20 MHz

 142,220,000

0.06

Vodafone 2×15 MHz

 108,180,000

0.06

Telecom Italia 2×15 MHz

109,120,000

0.06

H3G 2×10 MHz

72,440,000

0.06

Total 120 MHz

431,960,000

0.06

Band: 2600 MHz TDD
Operator Bandwidth

Price (€)

€/MHz-PoP

H3G 30 MHz

74,035,100

0.04

Total Auction

3,945,495,100

Vodafone and Telecom Italia secured licenses in all three bands, while Wind secured 800 MHz and 2600 MHz spectrum and H3G secured 1800 and 2600 MHz spectrum. H3G is placed at a disadvantage when it comes to prime spectrum in lower frequency bands, especially as the 1800 MHz band they acquired is only 2×5 MHz which is considered small for mobile broadband services (highest capacity efficiency achieved with 2×20 MHz channel). However, H3G secured all 30 MHz of TDD spectrum in the 2600 MHz band which potentially can be used to deploy downlink carrier aggregation on LTE network, TD-LTE technology, although in my opinion this will be a longer stretch, or backhaul for small cells which are set to play a more prominent role in meeting operator capacity targets.

The 2600 MHz FDD spectrum was 2.6 times higher than what was paid in Germany in 2010 but at 44% discount of what was paid in France in the auction that also concluded in September 2011. The 800 MHz was about 11% more expensive than what was paid in Germany and about 1.7 times of what was paid in Spain in August of this year.

Operators will be able to use the 800 MHz ‘digital dividend’ spectrum in January 2013 after television stations have freed it up. The 1800 MHz and 2600 MHz are due to become active at the end of 2011 and 2012, respectively. The licenses will run until December 31, 2029.

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About Frank Rayal
Technology strategy, markets and M&As

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