UK’s four mobile networks commit to pay a combined £1,356,400,000 latest spectrum auction

A total of 200 MHz of spectrum was available to bid for in the auction, split across two bands

Ofcom has announced the outcome of the principal stage of its auction to release more airwaves to improve mobile services and support 5G. The four major operators BT/EE, Three, Telefonica UK (O2), and Vodafone acquired all of the 200-megahertz available across the 700 MHz and 3.6-3.8 GHz bands.

A total of 200 MHz of spectrum was available to bid for in the auction, split across two bands:

  • 80 MHz of spectrum in the 700 MHz band. These airwaves consist of 2×30 MHz of paired frequency spectrum, and 20 MHz of supplementary downlink spectrum. The 700 MHz airwaves are ideal for providing wide area coverage – including in the countryside.
  • 120 MHz of spectrum in 3.6-3.8 GHz band. These important airwaves are part of the primary band for 5G and capable of boosting mobile data capacity, carrying lots of data-hungry connections.

Four companies – BT/EE, Three, Telefonica UK (O2), and Vodafone – took part in the principal stage of the auction, which involved them bidding for airwaves in 34 ‘lots’ to determine how much of the available spectrum they each secured. Principal stage bidding has now ended.

BT came away with the most spectrum and like Telefonica’s O2 purchased across both bands. Meanwhile, Three and Vodafone won frequencies in the 700 MHz and 3.6 band, respectively.

Results of the principal stage

BT spent £452 million to obtain 80 MHz. That includes 20 MHz (2×10 MHz) paired at 700 MHz (£280 million); 20 MHz unpaired 700 MHz (£4 million); and 40 MHz at 3.6 GHz (£168 million).

Telefonica/O2 spent a little bit less at £448m for similar winnings to BT – minus the unpaired 700 MHz – for 2×10 MHz paired 700 MHz and 40 MHz at 3.6 GHz. That compares to expectations for spending of £610 million.

Three spent £280 million ($388 million) for 2×10 MHz at 700 MHz.

Vodafone spent £176.4m to obtain 40 MHz, at 3.6 GHz – significantly less than pre-auction estimates of £720 million.

The 3.6 GHz spectrum was sold at €0.08 per MHz-pop, representing “a material discount to the European average of €0.19/ MHz.pop” in the four other major markets, according to New Street Research. The 700 MHz bock was also below the €0.47 per MHz-pop average, at €0.27/ MHz.pop.

The total revenue raised from the principal stage is £1,356,400,000 with all money to be paid to HM Treasury.

BT increased its sub-1 GHz spectrum holdings to 50 MHz post auction (up from less than 10MHz), while O2 now has 75 MHz (up from 55 MH), and Three increased to 30 MHz (up from 10 MHz).

Marc Allera, CEO of BT’s Consumer Division, tweeted that he was “delighted [EE] secured critically important new radio spectrum” for the its 5G network, adding that BT will start deploying it later this year.”

O2 added to both low and mid-band spectrum, having the smallest spectrum position coming into the auction.

In a statement, Telefonica said:

This demonstrates Telefonica’s continued commitment to the UK Market and the very best connectivity for our customers. We are delighted with the result, which secured the right spectrum at a fair price.

This additional spectrum will allow for continual improvement in our network. We pride ourselves on being a champion of reliability and quality coverage and look forward to continuing to invest in digital infrastructure to build Britain’s connectivity, for the benefit of all.

Three was the only one not to scoop up 3.6 GHz spectrum, but already held 80-megahertz before the auction. Three CEO Robert Finnegan said the auction triples the amount of low-band spectrum the operator owns and will have an impact on customers’ experience indoors and in rural areas.  

“We are delighted to have won two 10MHz blocks of low frequency spectrum at the auction,” Finnegan stated.

“Coupled with our existing low frequency spectrum and the UK’s largest 5G spectrum holding, we are in a fantastic position to deliver a great network experience for our customers now and in the future.”

Every other operator picked up 3.6-3.8 GHz for the first time, each securing 40 MHz.

Lutz Schüler, CEO of Virgin Media said:

“This is a resounding sign of support and longer-term clarity from Ofcom for those rolling up their sleeves to build the nation’s next-generation digital infrastructure.

“As Britain looks towards bouncing back, it’s vital that the right environment exists to get more pounds pouring into the country – unlocking investment is crucial to turning broadband ambition into action.

“Ofcom’s focus is in the right place, and we urge the regulator to maintain this trajectory so that more of the country can benefit from competing gigabit networks that deliver long-lasting economic, societal and environmental benefits.”

The UK’s second 5G spectrum auction began Friday, with Ofcom confirming that EE, O2, Three, and Vodafone are all participating. This is the first phase in the two-phase process, in which the carriers competed for individual lots of spectrum, with the second phase relating to the specific positions of the spectrum blocks being awarded.  

The spectrum made available is 80MHz in the 700MHz band, which has been cleared over the last four years by its previous users in the digital terrestrial TV and wireless microphones, as well as 120MHz of spectrum in 3.6–3.8 GHz band.

This auction in fact comes after some minor delays caused by the coronavirus, the advent of which actually saw some of the UK’s carriers argue that Ofcom should simply allocate the available spectrum at the reserve price. Once again, Ofcom rejected these pleas, arguing that there was no feasible way for them to simply allocate the spectrum quickly, efficiently, and fairly in light of their duties.