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Pin to quick picksVodafone Share News (VOD)

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UPDATE 3-German wireless spectrum auction raises 5 bln euros

Fri, 19th Jun 2015 17:40

* Bidding ends after 181 rounds in 16 days

* Vodafone highest bidder with 2.1 bln euros

* Deutsche Telekom bids 1.8 bln, Telefonica 1.2 bln (Rewrites, adds comment from German telecoms regulator)

By Harro Ten Wolde and Peter Maushagen

MAINZ, Germany, June 19 (Reuters) - Germany has raised about5 billion euros ($5.75 billion) from Deutsche Telekom, Telefonica Deutschland and Vodafone in an auction of radio frequencies that can be used bymobile phone operators.

The rival companies bid for new blocks of airwaves tosatisfy growing consumer demand for streaming video and otherdata-consuming applications via 4G technology.

Analysts had expected the auction to raise a maximum of 4-5billion euros after the German wireless market consolidated fromfour to three players last year.

But the proceeds are a far cry from the roughly 50 billioneuros the government raised in an auction in 2000 for new 3Gnetwork licences, when there were six groups bidding.

The total raised was 5.08 billion euros; Vodafone bid thehighest with a sum of about 2.1 billion euros, followed byDeutsche Telekom with 1.8 billion and Telefonica Deutschlandwith 1.2 billion, the German telecoms regulator said.

"All parties are satisfied with the results, as are thepoliticians," said regulator Jochen Homann just before signingthe official documents at a ceremony which was delayed almosttwo hours as the certificates got stuck in traffic.

Analysts said the prices were low compared with whatoperators paid in a similar auction in the United States,however.

OLD TV FREQUENCY

Germany started the auction three weeks ago, setting a floorof 1.5 billion euros. The bidding went through 181 rounds,spread over 16 days. The government has earmarked part of theproceeds to help develop a fast fixed-line broadband network.

On Monday, European Union state aid regulators approved a3-billion-euro support scheme to roll out faster Internet inGermany.

"Five billion is a small fraction of the valuation of thisspectrum mix based on the U.S. auction outcome, normalised forGerman population," said Antonios Drossos co-founder of Finnishtelecoms advisory firm Rewheel.

Earlier this year the U.S. Federal Communications Commissionraised a record $44.9 billion or $2.21 per megahertz (MHz) perperson in an auction of so-called AWS-3 airwaves, the highestpoint yet in the wireless industry's demand for spectrum.

The German auction was the first in Europe to include thelow-frequency 700 MHz band formerly used to carry the analoguesignals of regional television stations.

These wavebands have longer reach and deeper penetrationinto buildings than the higher frequencies currently used bymobile network operators. Auction winners will have to promisethere will be almost no "black holes" in network coverage.

The 700 MHz auction yielded only around 0.20 euros per MHzper person in the country of 80 million. That is below the 0.26euros per MHz per person that was paid in Italy's 2011 auction.

France on Friday set a minimum price of 416 million eurosfor each of six blocks of 700 MHz spectrum, which will be put onauction before the end of the year.

($1 = 0.8839 euros) (Editing by Keith Weir and Pravin Char)

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