Italy’s Ministry of Economic Development announced the completion of the national 5G spectrum tender, with the total amount raised after 14 days of competitive bidding coming to EUR 6.55 billion, more than EUR 4 billion over the minimum reserve price of EUR 2.5 billion. The five companies vying for spectrum in the in 694-790MHz, 26.5-27.5GHz and 3.6-3.8GHz bands – Telecom Italia (TIM), Wind Tre, Vodafone, Fastweb and Iliad – ended up offering some 164 percent more than the value of the initial bids made on 11 September, due above all to the demand for spectrum in the 3.7 GHz band, available from 01 January 2019, which raised a total of EUR 4.35 billion.
Telecom Italia (TIM) and Vodafone Italia led the bidding, spending a total of EUR 2.41 billion each, followed by new entrant Iliad with EUR 1.19 billion, Wind Tre with EUR 517 million and Fastweb with EUR 32.6 million.
TIM and Vodafone each ended up acquiring an 80MHz block in the 3.7 GHz band and a 200MHz block in the 26 GHz range, in addition to the 2x5 MHz blocks in the 700 MHz band. The 3.7 GHz band proved the most expensive, with each operator spending nearly EUR 1.7 billion on the frequencies. However, the 700 MHz band proved the most valuable in MHz per capita, at EUR 0.67.
Wind Tre won a smaller 20MHz block in the 3.7 GHz band and 200MHz in the 26 GHz band. Despite spending the least of the four incumbent operators in the auction, the company said it would still be able to launch 5G services thanks to the 30 MHz of spectrum it already holds in the 2.6 GHz band. Fastweb was content with a 200MHz block in the 26 GHz band, having already acquired 3.5 GHz spectrum from Tiscali.
Under the tender’s rules, new entrant Iliad had a special right to acquire up to three blocks of 2x5 MHz in the 700 MHz band of the six available, for which it bid EUR 676.5 million. The French operator also spent EUR 483.9 million for 20MHz in the 3.7 GHz band and EUR 32.6 million for a 200MHz block in the 26 GHz band. The company noted in a statement that it will be allowed to spread out the payments for the licences over several years, with the bulk of the amount, EUR 993 million, only falling in 2022.
The ministry added that no initial bids were submitted for the blocks made available in the 700 SDL band, which will be sold on in a new tender starting on 05 October.
The 3.7GHz spectrum will be available from 01 January 2019 and is expected to be used to enhance coverage, improve capacity and for the rapid development of 5G services. TIM and Vodafone said they plan to start using the spectrum immediately, including support for their ongoing 5G trials. However, the 700 MHz band frequencies are unlikely to be freed up until 2022.
High price
The amounts shelled out by operators have already caused concern, with trade unions issuing a joint statement last week saying the auction had been conducted “without a rational analysis of the investment to potential revenue ratio” and warning that it could "risk the business continuity" of already heavily-indebted operators.
Vodafone Group CEO Nick Read was also critical, saying in a statement: "Auctions should be designed to balance fiscal requirements with the need for investment to enable economic development. Telecoms is the sector that enables all other sectors to participate in the Gigabit society. It is critical that European governments avoid artificial auction constructs which fail to strike a healthy balance for the industry."
