TPG and newcomers pass on Australia 5G spectrum sale

Optus and Telstra shared the prey at this week’s auction over frequencies below 1 GHz for 5G in Australia, where smaller rival TPG refused to participate and new market participants were absent.

The sale of 16 batches of frequencies in the 850/900 MHz band raised A $ 2.09 billion, the Australian Communications and Media Authority (ACMA) noted. Optus accounted for nearly three-quarters of the figure, parting with A $ 1.48 billion for 12 parties, while Telstra committed A $ 615.7 million to secure the rest.

Optus is naturally optimistic. CEO Kelly Bayer Rosmarin described the 900 MHz band as a “foundation” for the telecommunications company’s 5G network and insisted that the auction result was a “fantastic result for Australian consumers and businesses.”

But depending on your point of view, the sale could be seen as something of a damp squib.

Under the auction rules, which limited ownership to the low-band spectrum, Telstra was limited in the amount of frequencies it was able to bid on and won the maximum allowed. The telecommunications company followed Optus by announcing the news “a win” for its customers, especially in regional and rural areas. Fair point. Additional spectrum is never a bad thing.

But with Telstra handcuffed to some degree, the lack of interest from other players paved the way for Optus to pick up the rest. 2 x 25 MHz, to be exact, including the lots it had reserved for it prior to the sale.

“We applaud the government for prioritizing competition and consumer interests in ensuring a competitive auction process that has also delivered fairer holdings of this critical low-band spectrum,” said Bayer Rosmarin.

While the auction has leveled off Telstra and Optus’ spectrum stocks, it has not opened up the market anything.

Third operator TPG Telecom also allocated frequencies as part of the government’s rebalancing plan, but chose not to accept the offer.

The Sydney Morning Herald quoted TPG Telecom CEO Iñaki Berroeta as saying his company already has a low-band spectrum and did not feel it would be in the interest of customers or shareholders to spend more money on the auction.

It seems like an unusual position, but the comment comes just three weeks after Berroeta announced the launch of 5G standalone, while noting that the telecommunications company’s 5G network coverage now reaches 85% of the population in 10 of Australia’s largest cities and regions. Given Australia’s population distribution, this is not as thin a claim as it may immediately appear. TPG is clearly satisfied with its current position.

When the government opened applications for the auction just over three months ago, it was a matter of a new player having to participate. We did not expect a new full-scale mobile service provider to suddenly appear and bid heavily on frequencies – the merger of third and fourth operator TPG and Vodafone to create the current TPG Telecom was, after all, completed less than 18 months ago – but, again given the character of Australia’s geography, the auction could have proved to be a draw for a regional player looking at fixed wireless services.

But it was not to be, and the ether went to the big two. While they are obviously excited about it, the rest of us are likely to move on fairly quickly.

William

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