Everything Everywhere to divest spectrum ahead of 4G auction

UK operator Everything Everywhere, the company formed through the national merger of Orange and T-Mobile, has revealed that talks are ongoing for plans to divest some of its 1800MHz spectrum ahead of Ofcom’s spectrum auction later this year.

In March 2010, the firm was instructed by the European Commission to divest a quarter of the 1800MHz spectrum owned by Orange and T-Mobile, which is currently being used for its 2G services.

A company spokesperson told Telecoms.com that the operator has been speaking to several external advisors about how to go about selling the spectrum. The spokesperson confirmed that the company is in talks with the Royal Bank of Scotland (RBS) to oversee the sale, but stressed that an agreement has not yet been confirmed.

UK regulator Ofcom is due to hold its 4G spectrum auction towards the end of 2012, and recently announced new proposals which would sees it withdraw a guarantee to Everything Everywhere that it would be assigned a slice of the 800MHz spectrum band for its LTE services. The body believes the benefits of operating LTE at 1800MHz, in some instances, are higher than operating at 800MHz, as the 1800MHz band allows more capacity.

“Once we have appointed a body to oversee the sale, we can set a date for it and then we will begin conversation with potential buyers – and we want to do this sooner rather than later,” said the spokesperson.

“It won’t necessarily be an auction, as Ofcom is holding. For the sale of our spectrum, we might look at having a private sale, where we talk to various potential buyers.”

Competitor 3UK will be watching proceedings closely, as it has been guaranteed spectrum in the 800MHz band by Ofcom, unless it, or a new operator that enters the market, acquires some of Everything Everywhere’s 1800MHz spectrum.

Last week, Matthew Howett, analyst at Ovum, told Telecoms.com: “It’s up to 3UK to decide whether it values spectrum in the 1800MHz band more than the 800MHz band and decide whether it participates in the bidding of Everything Everywhere’s 1800MHz band before the auction.”

“It needs to spend time doing cost benefit analysis to find out what works for its business. However, if a new entrant comes along and secures some 1800MHz spectrum, which is not very likely but still a risk nonetheless, 3UK can mitigate the risk by bidding for 1800MHz or by bidding aggressively for 800MHz.”