Spain nets €1 billion in lacklustre 700 MHz sale

Spain has finally auctioned off spectrum in the 700 MHz band, but bidding was lacklustre at best, with the final total only just exceeding the reserve price.

The sale brings in €1.01 billion, with the big three operators – Telefonica, Vodafone and Orange – all taking home frequencies, but no mention of challenger player Masmovil. All the available paired 700 MHz frequencies were snapped up, but 15 MHz of unpaired spectrum was left unsold.

Only Telefonica paid in excess of the reserve price for its spectrum, securing a 2×10 MHz block for just over €310 million, some €40 million ahead of the base price. The biggest spenders were Vodafone, which picked up a paired 10 MHz block for €350 million, and Orange with two 5 MHz blocks at the same price.

But in all honestly, talk of big winners and big spenders is somewhat redundant in this situation; this was hardly an auction of frenzied activity.

That didn’t stop the telcos themselves talking up the outcome though.

Orange described itself as having “consolidated [its position] as the operator with the largest amount of spectrum in the two priority bands for the deployment of 5G technology,” referring to its existing holding of 110 MHz in the 3.5 GHz band (3.4 GHz-3.8 GHz).

In a very similar announcement, Telefonica went with “consolidat[ing] its leadership in connectivity by combining the promotion of 5G coverage with its extensive fibre network in Spain.” It also referenced its existing holdings in other bands, including 100 MHz at 3.6 GHz, and declared itself the market leader in terms of low-band spectrum.

Presumably their PR teams went on the same training course…

Vodafone, whose 3.6 GHz holdings stood at 90 MHz incidentally, was a little more measured, sharing its intention to improve 5G coverage, including indoors, and was the only one of the three to mention the auction process itself.

“Vodafone welcomes the improved conditions offered by the government for this spectrum auction, which represents an important step towards achieving a sustainable, economically viable sector necessary for continued investment in connectivity,” said Colman Deegan, CEO of Vodafone Spain.

Indeed, the auction outcome is a better result for the telcos than it is the government.

The Spanish Ministry of Economic Affairs and Digital Transformation (MINECO) improved the auction conditions in an attempt to encourage operators into more competitive bidding. In addition to offering the potential to extend the validity period of the licences from the initial 20-year term by a further 20 years, the state also reduced reserve prices from those it mooted last year. Minimum bid prices dropped by an average of 15%, lowering the combined reserve price to €995.5 million from €1.17 billion.

As we now know, the auction total failed to reach that initial floor price. So you could argue that the government’s strategy failed. Or you could take the view that the less operators have to pay for spectrum the more they are able to invest in their networks and – in theory, at least – the less they have to charge consumers. That last point could be an important consideration in Spain in the coming years, with fourth player Masmovil ramping up the competition and keeping prices low.

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