UK 4G Spectrum Auction Concludes – A Brief Analysis

4G Spectrum AuctionThe long-awaited 800 MHz and 2600 MHz UK auction concluded today with a total of £2.34 billion, or $3.63 billion (Ofcom set reserve price at £1.3 billion). The winners of 60 MHz of digital dividend spectrum in 800 MHz band include EE, 3G, O2 and Vodafone. In the 2.6 GHz band, Vodafone, EE and BT divided 185 MHz among them with the lion share going to EE who got 75 MHz of paired spectrum. The winners will participate in a second round to decide on the exact frequency allocations.

Winning bidder 800 MHz Spectrum won 2600 MHz Spectrum won Base price
EE 2 x 5 MHz 2 x 35 MHz £588,876,000
Hutchison 3G UK 2 x 5 MHz £225,000,000
Niche Spectrum Ventures (a subsidiary of BT Group) 2 x 15 MHz and
1 x 20 MHz (unpaired)
Telefónica UK Ltd 2 x 10 MHz
(coverage obligation lot)
Vodafone Ltd 2 x 10 MHz 2 x 20 MHz and
1 x 25 MHz  (unpaired)
Total £2,341,113,000

The prices paid in this spectrum auction for the 800 MHz band are relatively weak in comparison to that of other major European countries. The average $0.64/MHz-PoP is just below that of Spain ($0.68) and well under that of Germany ($0.89), Italy ($1.11), and France ($0.9).

The prices for the 2.6 GHz band are higher, with estimated average of $0.1/MHz-PoP. This is well above that in countries like Germany ($0.027), Spain ($0.038), and Italy ($0.08 for FDD), but lower than France ($0.14).

Vodafone comes out in a good position with 20 MHz in 800 MHz for LTE services and a 20 MHz band in 2.6 GHz in which it can deploy eventually small cells with an added 25 MHz of TDD spectrum that can potentially provide additional downlink capacity using carrier aggregation techniques.

Hutchinson 3G comes out in the last position with only a paired channel of 5 MHz in 800 MHz. Narrow channels limit the peak throughput of LTE. While EE has won a similar allocation, it already has significant holdings in 1800 MHz and also won significant bandwidth in 2.6 GHz that can be used for broadband services.

Finally, BT is now in the game with a paired 15 MHz channel and a single 20 MHz unpaired channel in 2.6 GHz. It would be interesting to learn more of their plans for this band.


About Frank Rayal
Technology strategy, markets and M&As

One Response to UK 4G Spectrum Auction Concludes – A Brief Analysis

  1. Kevin Oemering says:

    Hi Frank, I think one of the initiatives BT are addressing is Small Cells either as a direct service or a wholesale whitelabel to the other MNOs. Certainly O2 with only a 800MHz allocation would benefit from some sort of access at 2600, especially as their trials in London were based on the latter frequency.

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