The auction of spectrum needed to launch 5G services in the future has raised £1.35bn as the four mobile networks all secured portions of the airwaves in the sale.
The proceeds were much higher than expected as the four companies O2, Vodafone, EE and Three all battled fiercely for the spectrum in the 3.4Ghz range that is needed to launch 5G. Royal Bank of Canada had expected total proceeds of around £1bn at the start of the sale.
That saw the cost of spectrum soar for all the operators as they prepare for the launch of the new network technology. EE, part of BT, paid £302.6m for 40Mhz of the 5G spectrum while O2, owned by Telefonica, paid £317.7m for the same amount,. Vodafone spent £378m on a 50Mhz slice of the 5G spectrum while Three, owned by CK Hutchison, paid £151m for 20Mhz.
O2 scooped up all the spectrum in the 2.4Ghz range that was also put up for sale. That spectrum is needed to boost 4G signals. The auction was particularly significant for O2 as it paves the way for a potential float or sale of the UK network by its Spanish owner. Telefonica, which has previously tried to sell O2, has been hampered in its plans to float the UK network due to delays and uncertainty around the outcome of the auction.
Airspan Spectrum Holdings, a fifth bidder that was backed by SoftBank, failed to win any airwaves.
Dhananjay Mirchandani, an analyst with Bernstein, said that the high price paid is a surprise. “The outcome of the 3.4 GHz auction sets a challenging precedent for the sector in the run up to 5G. At 12 pence/MHz/capita, the results are well above the 6-8 pence/MHz/capita we had anticipated”.