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4G auction: the winners and the losers from £2.3bn bidding war

20 Feb 2013
Mobile spectrum antenna

After years of in-fighting and delays, the UK mobile operators have finally secured the rights to portions of new 4G spectrums that will allow them to offer high speeds services to customers across the UK.

The cost of £2.3bn for the new holdings in the 2.6GHz and 800MHz bands also represents a great deal for the operators, when compared to the whopping £22bn paid for 3G licensees in 2000. It's also a good bit lower than the government's initial estimate of £3.5bn it predicted the auctions would raise last year.

Indeed, in the 3G auctions in 2000 each individual operator paid more than the total raised this time, with the lowest bid set at a staggering £4.03bn at the time.

No doubt the operators' financial teams are cock-a-hoop with the outcome this time around. The Treasury less so.

It had planned for a windfall of £3.5bn based on estimates given by the Office for Budget Responsibility (OBR) and the Treasury was keen to pass any blame in their direction.

"The £3.5bn number at Autumn Statement 2012 was certified by the independent OBR and based on external expert independent analysis based on similar auctions, including the last 3G one," it said in a widely reported statement.

"The final auction revenue will be accounted for at Budget in the usual way."

Nevertheless, the government attempted to put a positive spin on the fact the auction had taken place for the future of the UK market.

"Today's announcement will deliver a significant economic boost to the UK," said culture secretary Maria Miller.

"Spectrum use is worth more than £50 billion to the UK economy and 4G mobile broadband is a key part of our digital growth strategy so, I am delighted the auction has been completed."

The lower price for the spectrum underlines the competitive nature of the UK telecoms market, according to Brian Potterill, director of PricewaterhouseCooper's telecoms strategy.

"The auction result breaks the trend that we've seen in recent auctions in Ireland and the Netherlands which saw prices exceed expectations," he noted.

"The UK has one of the most competitive mobile markets in the world and these auction prices reflect the impact of that competition on operators' ability to make profits."

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Dan Worth

Dan Worth is the news editor for V3 having first joined the site as a reporter in November 2009. He specialises in a raft of areas including fixed and mobile telecoms, data protection, social media and government IT. Before joining V3 Dan covered communications technology, data handling and resilience in the emergency services sector on the BAPCO Journal

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