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Australia's 5G Auction Nets More Than $600M for Govt.

Iain Morris
12/10/2018

Australia's telcos have forked out roughly A$853 million ($613 million) for new spectrum they can use to support future 5G services in a sign of keen interest in the next-generation mobile technology.

The government auction of airwaves in the 3.6GHz band drew participation from existing mobile operators as well as a new entrant called Dense Air, with headquarters in the UK.

In a statement on the auction results, the Australian Communications and Media Authority (ACMA) said that overall spending worked out at approximately A$0.29 ($0.21) per MHz per head of population, a common way to measure the value of spectrum.

That would make the Australian auction one of the costliest for telcos so far. Auctions of so-called "mid-band" spectrum earlier this year raised as little as $0.05 per MHz pop in Spain and just $0.04 in Finland. Even the UK's $1.44 billion auction of mid-band spectrum works out at just $0.15 per MHz pop. (See Finland's 5G Sale Is No Italian Job, UK's £1.4B '5G' Auction Looks Bad for Industry, Spanish 5G Auction Nets €438M for Govt and The Great 5G Spectrum Devaluation.)

However, expectations had changed following an Italian 5G auction in October, when operators spent nearly $5 billion on mid-band airwaves -- almost $0.41 per MHz pop -- and may consequently struggle to fund 5G rollout. The structure of the Italian auction seems largely to blame for that outcome, with four operators battling for a limited amount of spectrum carved into lots of different sizes. (See Italy's $7.6B 5G Bonanza Puts Telcos on the Rack.)

The ACMA said its auction had been designed to "maximize efficiency, competitive outcomes and the full utility of this spectrum for 5G." However, while licenses will last until 2030, operators will not be able to start using them until March 2020, putting Australia behind other countries launching 5G services in the mid-band spectrum.

The regulator also decided to auction spectrum on a regional basis, with only Telstra Corp. Ltd. (ASX: TLS; NZK: TLS) and Mobile JV -- a joint venture between TPG Telecom and Vodafone Hutchison Australia -- picking up spectrum licenses across the whole country as well as additional lots for the country's biggest cities.

Vodafone and TPG, which operates cable networks in Australia, announced plans to merge in August, and spent more than A$263 million ($189 million) on licenses.

In a statement, Vodafone CEO Iñaki Berroeta complained about the shortage of spectrum that has been made available to Australian telcos.

"While we are pleased to have secured spectrum licenses in every available area, robust competition for artificially limited supply saw the companies participating in the auction pay some of the highest per MHz per pop prices for 5G spectrum in the world so far," he said. "It's clear there is high demand for 5G spectrum, and more suitable spectrum needs to be made available by government."


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Despite the complaint, Mobile JV's outlay pales next to the $386 million ($277 million) that Telstra splashed on airwaves as it aims to remain at the forefront of Australia's mobile market in the 5G era.

A subsidiary of Singapore's SingTel, Optus Administration Pty. Ltd. spent about A$185 million ($133 million) in total but acquired only regional licenses and none of the additional spectrum for major cities. Its lack of 5G spectrum in these communities could leave Optus at a disadvantage in the future, as demand for more sophisticated applications gobbles up available spectrum.

Dense Air took the opposite approach, spending about $18.5 million ($13.3 million) on concessions in Adelaide, Brisbane, Canberra, Melbourne, Sydney and Perth. A subsidiary of US-based Airspan Networks, Dense Air is building wholesale 4G and 5G networks in countries including Belgium, Ireland, Portugal and New Zealand and seems unlikely to compete against Australia's mobile operators in the retail market.

On its website, the company says its services are "designed to improve coverage and capacity in locations that are technically difficult are commercially uneconomic to support."

— Iain Morris, International Editor, Light Reading

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