CSL exits “desperate” Hong Kong auction

Telstra has defended its decision to withdraw from Hong Kong’s spectrum auction. The firm said that “bids were destroying value” and that it had only participated in “an opportunistic way” because it already owns significant spectrum and would therefore “retain leadership no matter what the outcome of the auction could be.”

Telstra, which owns local operator CSL, said the auction set new benchmarks for spectrum prices, with competitors paying roughly 2.5 times what Telstra originally paid for 3G spectrum and up to 6.5 times what CSL had paid per MHz in the January 2009 BWA auction. Putting a positive spin on its withdrawal, Telstra said that CSL was seeing the value of its existing 2G, 3G and 4G spectrum rise significantly.

CSL Chairman Tarek Robbiati said that the whole process looked like “desperate bidding”, adding his belief that competitors had “misjudged the importance of spectrum for LTE in the more strategic 4G BWA auction in 2009.” Robbiati said that his competitors had missed the mobile data boat and that acquiring 2x5MHz of discontinuous spectrum “is too little too, late at too high a price,” before branding competitors as “pyrrhic winners” who will “have to compromise on their LTE network investment or run the risk to destroy value for their shareholders.”

Sour grapes or no for Telstra, Hong Kong’s auction saw competitors SmarTone (owned by Vodafone) awarded frequencies in the 850MHz for HK$875 million (about US$112 million); 3 Hong Kong paid HK$1.08 billion for its 900MHz allocation. SmarTone said it will use its allocation to increase network capacity and boost its HSPA+ service, adding that its low-range purchase would offer “even better in-building coverage” to customers.

According to Telstra, CSL’s 127.6MHz of spectrum gives it “28 per cent more spectrum than any other mobile operator.” CSL launched the world’s first LTE/dual cell HSPA+ network in November last year.

The seventh annual LTE World Summit takes place in Amsterdam on 17th – 18th May. <>

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