Spanish Spectrum Auction Results: As Expected?

The results of the spectrum auction in Spain were published on Monday. The auction was for digital dividend band frequencies in 800 MHz, a slice of 900 MHz spectrum and 2.5 GHz spectrum.

The regulator raised a total of €1.647 billion, which was below the expected €2 billion. The price paid for the 800 MHz digital divided band, which brought in €1.3 billion, was below that paid in Germany in 2010 where the same amount of bandwidth was sold at €43.7/inhabitant versus €28.4/inhabitant in Spain. Winners of spectrum in that band were Telefonica, Orange and Vodafone, each with 2×10 MHz slice. The fourth service provider, Yoigo, which is owned by TeliaSonera, did not win any, putting it at a competitive disadvantage when it comes to 4G/LTE network roll outs.

The 2.5 GHz spectrum fetched a higher price than in Germany. A Total of 140 MHz was sold for €172.7 million. This is about €3.8/inhabitant in comparison to €3.15/inhabitant paid in Germany. Major winners in this band are Telefonica and Orange, each with 2×20 MHz, and Vodafone with 2×15 MHz nationwide licenses, whereas the remaining 30 MHz was won by several operators on regional basis. The TDD band in 2.6 GHz remains unsold.

There were no surprises in this auction. The price for digital dividend ‘beachfront’ spectrum remains highly prized as it means lower network costs. The price for 2.5 GHz band is low, reflecting the anticipated additional expense of building out access networks in that band due to smaller cell size resulting from the poorer propagation characteristics of higher frequencies. The results demonstrate the challenge smaller operators face in acquiring prime access spectrum leaving them to look into higher spectrum bands or other techniques to grow and evolve their networks.