The auction of new 4G spectrum will be delayed after the threat of a legal challenge from the parent companies of O2 and Three.
A total of 190MHz of spectrum will be available, three-quarters of that released in the 2013 spectrum auctions that raised over £2bn for the government.
However, Telefónica and Hutchison, the owners of O2 and Three respectively, threatened legal action against Ofcom because they are currently in the process of a merger.
The companies have argued that it is unfair to have to bid for spectrum when they are unsure of their requirements, especially as there is concern among regulators that the deal may unbalance the UK telecoms market.
The likelihood is that this will not be sorted by the time the auction was initially scheduled, and Ofcom has said it will postpone it until a later date in 2016.
"After careful consideration, given these specific circumstances, we have decided for reasons of good public administration to delay commencing the auction process," Ofcom said in a statement on its website.
"Ofcom will not now commence the auction process until the European Commission has taken its decision as to whether the proposed merger between [O2] and [Three] is compatible with the common market."
O2 welcomed Ofcom’s decision arguing that it was the most sensible thing to do for several reasons.
“Proceeding with a major spectrum award immediately before the conclusion of two significant competition investigations would have created uncertainty in spectrum valuation,” it said.
“This would have risked an inefficient auction outcome that could have harmed competition, increased costs and prevented best use of the spectrum, ultimately leading to disadvantages for customers.”
Three had not responded to a request for comment at the time of publication.
The delay is not likely to affect the mobile operators too much as they still have enough spectrum to handle current mobile data demands.
Furthermore, BT may also welcome the delay as its acquisition of EE is still going through. As such, the chance to fully assess its requirements against its rivals', including Vodafone, could prove beneficial.
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