Osborne 4G windfall is on track as seven bidders get go-ahead
Dec 20, 2012 (London Evening Standard - McClatchy-Tribune Information Services via COMTEX) --
George Osborne's hopes of raising at least pounds sterling 3.5 billion from the auction of super-fast 4G mobile spectrum today got a big boost as seven telecoms firms were approved as potential bidders by regulator Ofcom.
The three new entrants seeking to snap up some of the 4G airwaves are BT, China's PCCW and niche UK operator MLL Telecom.
But analysts said they expected the existing four players -- EE, owner of Orange and T-Mobile, Vodafone, O2 and Three -- to pick up the lion's share.
Osborne, below, came under fire in his Autumn Statement when critics said he was too optimistic for pencilling in a pounds sterling 3.5 billion windfall, but that looks realistic after a Dutch 4G auction last week showed demand.
The auction in the Netherlands raised pounds sterling 3 billion, more than double what was expected, as five bidders engaged in furious bidding for three main packages of spectrum.
However, the UK auction is unlikely to smash forecasts like last week's Dutch sell-off, according to Will Draper of Espirito Santo bank. Draper said Ofcom had structured the UK sale process in such a way that all the four existing players were likely to be satisfied without "an overheated auction".
He reckoned EE, Vodafone, O2 and Three would likely each pay up to pounds sterling 1 billion, netting the Treasury pounds sterling 3 billion-pounds sterling 4 billion. "I don't think there's anyone in there apart from BT who could upset the apple cart," said Draper, noting there were no surprise entrants such as United States giant AT&T or Mexican billionaire Carlos Slim.
All the signs from BT are that it is only looking to pick up a small amount of 4G spectrum for its mobile division for corporate customers.
BT's subsidiary Niche Spectrum Ventures has made the bid and Draper suggested it was "highly unlikely" it wants to become a major consumer operator.
"The conspiracy theory is that BT raised a lot of cash for the Premier League football auction [which they didn't spend] and it's burning a hole in their pocket and they've always coveted some mobile spectrum, ever since they sold O2," he said.
The sell-off will raise only a fraction of the pounds sterling 22 billion in 2000, when the last big auction took place for 3G, or third-generation, mobile airwaves.
Mobile operators are desperate for fourth-generation spectrum as it means the networks can carry more data, which will encourage smartphone and tablet owners to use their devices and boost revenues.
Ofcom chief executive Ed Richards said: "New 4G services will stimulate investment, growth and innovation in the UK and deliver significant benefits to consumers in terms of better, faster and more reliable mobile broadband connections."
Bidders will be competing for spectrum in two bands, 800 MHz and 2.6 GHz, in the auction, which will take place in early 2013.
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