Minister Mitch Fifield has directed the Australian Communications and Media Authority ACMA to set a price of $1.25 per MHz per head of population on the remaining 2X15MHz of 700 MHz digital dividend mobile spectrum which was unsold in the May 2013 auction.
In 2013 the reserve price was set by then Minister Stephen Conroy at $1.36 /MHz/pop resulting in Telstra paying $1.244 Bn for 2X20MHz and Optus $0.622 Bn for 2X10 MHz. The new Fifeild reserve price is essentially the same as Conroy’s adjusted for the lesser period of the license.
Telstra will be prevented from buying any of the remaining spectrum as the Minister has followed the recommendations of the ACCC HERE and set a limit of 2X20MHz for any one operator for the spectrum.
Optus may choose to to add to its 2X10MHz acquired in 2013 and now widely used in its LTE 4G network.
Vodafone, which did not participate in the 2013 auction, made an offer of $594M to the Government in May 2016 for 2X10MHz of the 700 MHz spectrum. This offer was rejected instead leading to the proposed auction. Vodafone has the least spectrum of the three operators and is keen no doubt to acquire some of the remaining 700 MHz spectrum.
TPG is another would be mobile network operator who, it is said, may be interested in the spectrum. TPG has just won the fourth mobile license in Singapore with a $99M AUD bid gaining access to 60MHz of spectrum on the island in the process. Now as a mobile operator in Singapore TPG will be eligible to bid for 700MHz spectrum which will be auctioned, among other bands, in 2017 and available from 1 January 2018. The Singapore price on the 700MHz lots comes out at $.35 AUD /MHz/pop less than one third of Mitch Fifield’s ask. Considering the Singapore license cost and conditions and the network roll-out capital costs to achieve full island in-building and tunnel coverage in 30 months TPG may be stretched.
ACMA has called for applications for the spectrum auction which close on 13th February 2017. The auction is expected to start on 4th April 2017.
If the spectrum sells at the reserve price (as happened in 2013) then the Government would bank around $858M though instalment options are apparently being considered.