Spain to auction 700 MHz for 5G, with sweetened conditions

The Spanish government has announced it will auction the 700 MHz by mid-July for the deployment of 5G networks in the country, and has improved commercial terms to encourage bids.

In an official release signed by the Minister of Economy and published on the State Official Bulletin, the Spanish Ministry of Economic Affairs and Digital Transformation (MINECO) announced that the auction of 700 MHz (covering 694 to 790 MHz) spectrum for 5G deployment will be conducted by 21 July. Qualified bidders should submit their applications by 2 July.

After multiple delays due to the Covid-19 pandemic and the delayed cleaning of the band to go with the pandemic (the 700 MHz was used for terrestrial digital TV service until last October), this auction is finally happening. This is the next step of the radio spectrum management and planning for 5G, defined in ”Spain’s 5G National Plan 2018-2020”, after the auction of 3.4-3.6 GHz spectrum in February 2021.

However, to avoid a repeat of the lacklustre reactions from the operators to the auction of February, when Telefonica and Orange were the only operators to bid and both acquired their 10 MHz lot at the reserve price (€21 million), the government decided to sweeten the conditions to encourage more enthusiastic bidding.

Being offered at the upcoming auction are seven tranches of spectrum, with two paired 10 MHz blocks and two paired 5 MHz blocks on the 703-733 MHz and 758-788 MHz bands for FDD deployment, and three 5 MHz blocks on the 738-753 MHz band for supplementary downlink (SDL).

To compare with the starting price listed last year, the starting prices have dropped by 12.5% to 20% depending on the frequency bands on offer, resulting in an overall discount of 15%. In other words, instead of seeking a starting price of €1.17 billion for the spectrums to be auctioned, the government is looking at a floor level of €995.5 million. The starting prices for the different bands are detailed in this table:

Source: MINECO

Another important concession is the valid period. While the official validity is 20 years, the new policy grants the auction winners a one-off renewal of another 20 years. In comparison, the frequencies bought on the mid-band by Telefonica and Orange are only valid for 20 years (until 2038).

The government expects the improved terms can encourage all the four operators to bid. According to research by Omdia, Telefonica and Orange are leading the Spanish mobile market each serving about 30% of the total subscriptions, with Vodafone providing service to about a quarter of the market. The challenger operator MásMóvil sits in the fourth position. In mid-May, MásMóvil requested MINECO to delay the 700 MHz auction further until it gets the clearance for its proposed acquisition of the regional operator Euskatel. With the public announcement it looks the auction is going ahead.