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Spanish 5G Auction Nets €438M for Govt

Telefónica, Orange and Vodafone divide mid-band airwaves that will support the launch of next-generation 5G services when equipment becomes available.

Iain Morris

July 26, 2018

4 Min Read
Spanish 5G Auction Nets €438M for Govt

Spain's auction of 5G spectrum has raised about €438 million ($511 million) for the government, more than four times its minimum price for licenses, with Telefónica, Orange and Vodafone dividing the airwaves.

The new licenses will allow Spain's operators to start providing next-generation 5G services when compatible devices and network products are ready.

Equipment availability is expected next year, although operators may be in little rush to launch 5G technology given doubts that customers will spend more on higher-speed services.

The new Spanish licenses cover the spectrum between 3.6GHz and 3.8GHz, which forms part of a "mid-band" range that is the focus of 5G activity in Europe and Asia.

The mid-band airwaves offer a compromise between the superfast capabilities of higher frequency bands, which have attracted more interest in the US market, and the coverage qualities of the lowest spectrum ranges. (See FCC's Rosenworcel: US 'Falling Behind' on 5G.)

Vodafone España S.A. scooped the biggest chunk of spectrum in the Spanish auction, collecting a 90MHz license for a fee of about €198 million ($231 million).

In a short statement on its award, Vodafone said it would use the license to support new services that require gigabit speeds and lower latency, a delay that occurs when signals travel over data networks.

The telecom industry hopes the reduction in latency that 5G brings will open up new service opportunities in fields like connected vehicles, robotics and industrial automated systems.

But executives and analysts remain skeptical, and the technology will initially be used to provide higher-speed connections for smartphone users and to relieve congestion on existing 4G networks. (See 5G Still More Like Rocket Fuel Than a Mission to Mars.)

After paying about €132 million ($154 million) for a 60MHz license, Orange Spain said it now has 100MHz of spectrum in the 3.6GHz range, having picked up a 40MHz concession for €20 million ($23 million) in 2016.

The operator said its holdings would give it a service advantage over its competitors. "Orange is the only operator in Spain to reach a total of 100MHz in this spectrum band, which is essential for the development of the new ultra-fast mobile broadband technology," it said in a statement.

Market incumbent Telefónica spent about €107 million ($125 million) for a 50MHz license in the recent auction.

Like Orange, the former state-owned monopoly previously acquired a 40MHz license in this range, giving it a total of 90MHz following this week's sale.

Telefónica said it would provide services starting in 2020, noting that it spent less than either of its rivals on a per-MHz basis.

Masmovil, Spain's low-cost, number-four telco, appeared to miss out on spectrum during the recent auction but already had licenses covering 80MHz in this range, according to press reports.

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Using today's exchange rate, operators participating in the auction spent about $0.05 per MHz per capita (a common industry measure) on their concessions, with Telefónica spending a marginally smaller amount.

From the operators' perspective, but perhaps not the government's, the outlay compares favorably with the UK's recent 5G auction when telcos spent £1.14 billion ($1.5 billion) on licenses in the 3.4GHz band. (See UK's £1.4B '5G' auction looks bad for industry.)

UK spending in this frequency range worked out at roughly $0.15 per MHz per capita.

Telcos throughout Europe have urged authorities not to attach high base prices to 5G licenses, arguing that heavy spending on airwaves will constrain their ability to invest in new and economically important 5G infrastructure.

However, during both the UK and Spanish auctions, competition between operators looks responsible for driving up government proceeds.

Elsewhere in Europe, Telecom Italia is now looking into the sale of non-core assets after the government set a target of raising €2.5 billion ($2.9 billion) from a forthcoming 5G auction. (See Telecom Italia Says 5G Auction May Force It to Sell Assets.)

— 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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