Australia’s telcos prepare for 5G era, spending $834 million on key spectrum

UK’s Dense Air emerges as fourth bidder

Mobile network operators will hand over $834 million for spectrum that will be used to deliver the first Australian 5G services.

The Australian Communications and Media Authority (ACMA) today announced the results of the government auction of spectrum in the expanded 3.6GHz band.

As expected, Telstra outspent its rivals by a significant margin. Australia’s largest telco spent $386 million on 143 lots — including, crucially, 12 lots each in Melbourne and Sydney where a lack of spectrum could have hampered its 5G efforts.

The TPG-Vodafone joint venture spent the second highest amount: It forked out $263 million for 131 lots. In addition to capital cities, the JV picked up a significant number of lots in regional areas.

The joint venture was formed while the companies prepare to merge. The two telcos are currently waiting for the Australian Competition and Consumer Commission to give its blessing to the tie-up; an ACCC response will potentially be issued later this week.

Optus picked up 47 lots for $185 million — the government’s competition limits blocked it from picking up additional spectrum in Sydney and Melbourne.

“The additional spectrum positions Optus strongly to deliver 5G services in cities, regions and holiday locations,” said Optus Networks managing director Dennis Wong.

“We are committed to commercially launching fixed wireless access services early in 2019 and we can now extend these services to regional Australia.”

Dense Air Australia Pty Ltd — the local subsidiary of UK-based Dense Air — also participated and won 29 lots for $18.5 million. The spectrum the company picked up was primarily in Adelaide, Brisbane, Canberra, and Perth; however, it also picked up a single lot in each of Melbourne and Sydney.

Comment has been sought from the company on its plans for the spectrum. Last month it acquired 70MHz of spectrum in the 2.5GHz band in New Zealand and announced it would offer network extension services to existing mobile operators using small cell technology.

The ACMA said that licences for the 3.6GHz spectrum will begin in March 2020 and extend until December 2030. However, the regulator said there are arrangements that will allow earlier access to the band in some circumstances. Both Telstra and Optus have indicated they plan to launch early 5G services in 2019.

Telstra’s CEO Andrew Penn said that the company was “very pleased with the outcome of the auction, both in terms of the spectrum we have secured and the overall way the auction was conducted”.

Earlier this month the telco demonstrated its first commercial 5G device — an HTC-built smart hub. Telstra has also been upgrading its base stations in preparation for the launch of 5G, with the company expecting to have 200 5G-ready sites by the end of 2018.

Vodafone Hutchison Australia CEO Iñaki Berroeta said that the 60MHz holdings acquired by the Vodafone-TPG JV “give us a strong 5G spectrum capability in each of these major cities.”

“While we are pleased to have secured spectrum licences in every available area, robust competition for artificially limited supply saw the companies participating in the auction pay some of the highest per MHz per pop prices for 5G spectrum in the world so far, with an average price of 29c/MHz/pop,” the CEO said.

“It’s clear there is high demand for 5G spectrum, and more suitable spectrum needs to be made available by government.”

Berroeta is expected to be CEO of the post-merger TPG-Vodafone company (which will be named ‘TPG Telecom Limited’).

“While VHA has now secured access to 5G spectrum, it is still important that we complete the merger with TPG to create a scale business with a significantly increased ability to invest in networks, new technologies and competitive plans and products for Australian customers,” Berroeta said.

The CEO said VHA is in the final stages of virtualising its core network, having completed its dark fibre transmission rollout.

“Consumers won’t be able to start using 5G on mobile until enabled smartphones are launched over the next few years, and we are working to launch 5G services in major cities before handsets are widely available,” he said.

“We are very pleased to have secured access to 3.6GHz spectrum through the joint venture as we continue to roll out our mobile network,” said TPG CEO David Teoh. “The 3.6GHz band is well known to be a lead band for 5G networks which will deliver to consumers better speeds and more capacity for the future.”

Comment has been sought from Optus and Dense Air.

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Tags VodafoneTelstraTelecommunicationsoptusTPGAustralian Communications and Media Authority (ACMA)spectrum5GDense Air

More about AustraliaAustralian Communications and Media AuthorityAustralian Competition and Consumer CommissionHTCHutchisonOptusTPG TelecomVHAVodafone

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