Tuesday, October 27

Telefónica, Orange and Vodafone: the reduced bid that will lower the spectrum in the 5G auction



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A dance of three. This will be the next auction of the 700 MHz band that the Government will launch the first quarter of 2021. The sources consulted by Invertia indicate that only Telefónica, Orange and Vodafone They will go with real interest to be awarded a part of the spectrum that will complete their 5G coverage.

The rest of the companies, among which are MásMóvil and Euskaltel, They have a different strategy to achieve their own 5G coverage, through purchases outside the auction or wholesale agreements with the first three operators, similar to what they already do with fiber optic deployment.

In this sense, the fact that only three companies bet on the auction and that others are more contained, makes the final bid less aggressive and, therefore, the spectrum that is achieved It is acquired at a lower cost than if there was a high demand.

One of the great concerns of telecommunications operators is precisely the cost of these frequencies, which in Germany and Italy rose to 6,650 million euros. In Spain, the Government has warned that they will not have collection objectives, although since it is an auction the final cost cannot be estimated.

In the sector, it is speculated that the total value of the bid could be around 1,000 to 1,500 million euros, which would be added to another 1,500 million per operator to deploy the entire 5G network. Along these lines, the fewer companies bid, the lower the overall cost that Spanish operators will have to face.

Battle for 5G

The 700 MHz band is the one that must be granted to telecos the capillarity they need to address expansion into smaller cities and connected industry. Telefónica, Orange and Vodafone They have started a fight for 5G with deployments in large cities and their objective is to position themselves not only in the residential market, but also in that of large companies and industries, where the true potential of the new technology will be displayed.

For this reason, the three will participate more strongly in the auction. In the case of Telefónica, it has committed to 75% coverage before the end of the year and must give capillarity to this network in the next two, something that will not be possible without a considerable block of 700 MHz spectrum.

In the case of Orange, its strategy also involves being a provider of wholesale wholesaler and for this it already has agreements signed with MásMóvil and Euskaltel to give them 5G coverage in some areas. In fact, the first 5G deployments of MásMóvil are being made on the Orange network.

For its part, Vodafone It also has a vocation for leadership in 5G. They were the first to launch it commercially a year and a half ago and are the ones with the most 5G awards in Public Administrations. In fact, they have a long way to go in contracts with companies and they cannot lower the intensity, for which they would need 700 MHz spectrum.

In the case of Euskaltel, de facto resigns from the auction upon closing an agreement with Orange. French operator will allow the Euskaltel Group use your network to offer its customers 5G mobile technology. The agreement between the companies will take effect from January 1, 2022.

MásMóvil and Euskaltel

The pact will have the same duration as the agreements for the operator service virtual mobile currently in force with Orange. That is, until June 2024. With this, the company ensures that it has an open network to deploy 5G, something that becomes more important in its strategy to strengthen the brand Virgin.

As to MásMóvil, last October reached an agreement with Orange through which access to 5G is guaranteed throughout the operator’s network French without having to do any additional deployment. In fact, its strategy in the previous auction in 2018 was to buy spectrum already awarded to Neutra y Eurona, in total 80 MHz in the 3.5 GHz band, that it obtained at market prices more advantageous than the bid itself.

Along the same lines, the CEO of the company, Meinrad Spenger, has indicated on several occasions that they do not rule out participating in this bid for the 700 MHz band, but that it is not something that is their priority and that they could live without this spectrum. At the center of the debate is how the auction will be structured.

By having fewer resources, MásMóvil calls for requirements that allow them to be on an equal footing with their competitors. A kind of spectrum reserve on which the Government has not yet ruled, which expects to have all the conditions of the auction in the first weeks of 2021.

So far and with the allocated frequencies of 3.5 GHz, Telefónica has been awarded 90 MHz, 30% of the market share, Orange 100 MHz, 27% of the market, Vodafone 90 MHz, 25% and MásMóvil 80 MHz, 10%.


Reference-www.elespanol.com

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