Italian Operators Bid €2.5B in 5G Spectrum Auction

The initial round of bidding hits the government target for auction proceeds, with operators able to increase their offers on September 13.

Iain Morris, International Editor

September 11, 2018

3 Min Read
Italian Operators Bid €2.5B in 5G Spectrum Auction

Five operators participating in Italy's auction of 5G spectrum have submitted initial bids worth about €2.48 billion (US$2.9 billion), according to a government statement, meeting the country's target for proceeds even before a subsequent round.

The bids came from Telecom Italia, Vodafone Italy, Wind Tre, Iliad (Euronext: ILD) and Fastweb SpA (Milan: FWB) and are a sign of keen interest in the airwaves that will be used to support next-generation 5G technology, which promises faster connections and greater efficiency than today's 4G networks.

Authorities had reserved a swathe of spectrum in the 700MHz band for Iliad, the country's newest operator, which paid about €676 million ($782 million) for the license.

Italian broadband operators Linkem and Open Fiber, a government-backed wholesale venture, had also registered to participate in the auction, but neither submitted bids. (See Seven Bidders Register for Italy 5G Auction.)

Under the auction rules, operators will be able to increase their bids during the next phase of the process on September 13. Italy's Ministry of Economic Development, which published the update on its website, has yet to provide more specific details of the bids from each of the participating operators.

Even so, the update is welcome news for Italian authorities after some telcos had previously voiced misgivings about the auction rules and the high base prices attached to spectrum licenses.

In July, Telecom Italia (TIM) warned investors the cost of participating in a 5G auction might force it to sell assets. It has already confirmed the sale of a majority stake in Persidera, an Italian broadcaster.

Along with Vodafone Italy and Wind Tre, the Italian incumbent has come under pressure from the launch of a low-cost mobile service by Iliad in May, although Telecom Italia appears to have coped better than its rivals.

Headquartered in France, where it has a long-established presence in the fixed and mobile telecom sectors, Iliad has managed to sign up more than 2 million Italian customers since May. Both Vodafone and Wind Tre have blamed disappointing quarterly results on the impact of Iliad. (See Iliad Grabs 1M Customers by Day 50 of Italian Odyssey.)

What are the key technologies and processes that will underpin successful, full 5G deployments? Check out our 5G Big Picture Prime Reading report to find out.

Italy's 5G auction includes 75MHz of spectrum in the 700MHz band, 200MHz at 3.6-3.8GHz and another 1GHz in the 26.5-27.5GHz range. Reports have indicated that two 80MHz and 20MHz licenses will be sold in the 3.6-3.8GHz bands, with the 26.5-27.5GHz range divided into five 200MHz blocks.

The lower-band airwaves typically provide much better in-building and wide-area coverage, while higher frequencies can support the very fastest connections. Because of its propagation qualities, the sub-GHz spectrum has tended to attract higher valuations in previous spectrum auctions.

However, the 5G auctions that have already taken place in Europe have generated lower proceeds on a per-MHz-per-capita basis than older 3G and 4G sales. (See The Great 5G Spectrum Devaluation.)

In Spain, authorities raised about €438 million ($507 million) from selling 3.6-3.8GHz spectrum, while a UK auction generated roughly £1.15 billion ($1.5 billion) from licenses in the 3.4GHz band. (See UK's £1.4B '5G' auction looks bad for industry and Spanish 5G Auction Nets €438M for Govt.)

Italy's auction looks different because it includes the 700MHz spectrum band, which has already been sold in some other European markets. The higher number of bidders than in other auctions could also drive up spectrum costs.

Analysts at New Street Research expect the Italian 5G auction to raise nearly €3 billion ($3.9 billion), according to press reports.

— Iain Morris, International Editor, Light Reading

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About the Author(s)

Iain Morris

International Editor, Light Reading

Iain Morris joined Light Reading as News Editor at the start of 2015 -- and we mean, right at the start. His friends and family were still singing Auld Lang Syne as Iain started sourcing New Year's Eve UK mobile network congestion statistics. Prior to boosting Light Reading's UK-based editorial team numbers (he is based in London, south of the river), Iain was a successful freelance writer and editor who had been covering the telecoms sector for the past 15 years. His work has appeared in publications including The Economist (classy!) and The Observer, besides a variety of trade and business journals. He was previously the lead telecoms analyst for the Economist Intelligence Unit, and before that worked as a features editor at Telecommunications magazine. Iain started out in telecoms as an editor at consulting and market-research company Analysys (now Analysys Mason).

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