Hungary Bars Digi From 5G Auction

Romania's Digi has been turfed out of Hungary's 5G auction room because it did not measure up to requirements, said the Hungarian regulator in a recent update.

The disqualification of the company, which already provides broadband and pay-TV services in Hungary, means just three operators will contest the sale of spectrum in the 700MHz, 2.1GHz, 2.6GHz and 3.6GHz frequency bands: incumbent Magyar Telekom as well as Telenor and Vodafone.

All three are existing mobile operators in Hungary and will bid for the spectrum they need to launch 5G, a higher-speed technology that could take the pressure off busy 4G networks amid rising usage of video and other advanced data services.

The NMHH, which regulates Hungary's telecom market, did not identify Digi in its statement, merely stating that "an applicant who did not meet the eligibility criteria was not registered by the NMHH." It did not provide any further explanation of its decision.

Digi was known to be the fourth applicant and is reported to have subsequently complained about its omission from the auction process, regarding the move as part of a long-running campaign against it by Hungarian authorities.

According to a report from Romanian newspaper Ziarul Financiar, Digi has filed a statement with the Bucharest Stock Exchange that says: "The company wants to inform its investors and shareholders that on September 13, 2019, the Hungarian Authority for Media and Telecommunications (NMHH) transmitted to the company the decision to reject the participation in the tender for the use of 5G frequencies in Hungary."

Digi reportedly plans to challenge the decision and says it was made without any justification. "This decision is added to a list of other adverse and controversial decisions that NMHH has adopted in relation to the companies within the Digi Group, over time, in the context of other radio frequency tenders," said Serghei Bulgac, the CEO of Digi, as quoted by Ziarul Financiar.

Data gathered by the European Communications Office shows Digi holds far less spectrum than any of its three Hungarian rivals, with just a paired 5MHz license in the 1800MHz band and 20MHz in the 3.4-3.8GHz range.

Digi has been relying on a wholesale deal with Telenor to provide mobile services and had 56,000 connections at the end of June, up from 17,000 a year earlier. It launched its own mobile network in May but said in its half-year earnings presentation that services would be limited to "existing customers" until it had finished carrying out network tests.

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Its failure to enter the latest auction will be welcomed by the other telcos amid concern about the impact competition could have on spectrum fees. Recent 5G auctions in Italy and Germany each raised about €6.5 billion ($7.2 billion) -- way more than original expectations -- and operators have been forced to pool resources as they start to build out their 5G networks. Critics continue to argue that auction costs will hinder 5G deployment.

In its domestic market, Digi began providing 5G services in June using equipment from Swedish manufacturer Ericsson. While Romania has yet to hold a 5G auction, Digi is using spectrum it already owns in the 3.6-3.8GHz range to support its 5G services.

The operator began providing services in Bucharest and said it would extend its offer into other big cities later in the year.

In Hungary, Digi's revenues grew 37.3% in the first six months of the year, to €110.4 million ($121.7 million), compared with the year-earlier period, thanks mainly to its takeover of local rival Invitel. Earnings (before interest, tax, depreciation and amortization) were up 69.1% over the same period, to €25.7 million ($28.3 million).

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— Iain Morris, International Editor, Light Reading

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