Chancellor's 4G cash prospects improve as seven bidders sign up
Thursday 20 December 2012
George Osborne's hopes of raising at least £3.5bn from the auction of super-fast 4G mobile spectrum got a big boost yesterday when seven telecoms companies were approved as potential bidders by the regulator Ofcom.
Three of the seven are new entrants seeking to snap up some of the 4G airwaves: BT, a subsidiary of China's PCCW, and the niche UK operator MLL Telecom.
But analysts said they expected the existing four players – EE (the owner of Orange and T-Mobile), Vodafone, O2 and Three – to pick up the lion's share.
The Chancellor came under fire in his Autumn Statement when critics said he was too optimistic for pencilling in a £3.5bn windfall, but that looks more realistic after a Dutch 4G auction last week showed demand.
The auction in the Netherlands raised £3bn, 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. Mr Draper said Ofcom had structured the UK sale process in such a way that the four existing players were likely to be satisfied without "an overheated auction".
He reckoned the four would pay up to £1b each, netting the Treasury £3bn to £4bn. "I don't think there's anyone in there apart from BT who could upset the apple cart," Mr Draper said, noting that there were no surprise entrants such as the US giant AT&T or the Mexican telecoms billionaire Carlos Slim.
All the signs from BT are that it is looking to pick up only a small slice of 4G spectrum for its corporate customers. A subsidiary, Niche Spectrum Ventures, will bid in the auction, which will take place in early 2013, and Mr Draper suggested it was "highly unlikely" it wanted to become a major retail 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 sale will raise only a fraction of the £22bn in 2000, when the last big auction took place for 3G, or third-generation, mobile spectrum.
In the running: The bidders
Everything Everywhere The merged Orange and T-Mobile became the first to launch 4G services last month.
HKT (UK) Subsidiary of Hong Kong telecoms group PCCW.
Hutchison 3G Known as 3, it was a newcomer in the last big spectrum auction; it became the first UK network to offer mobile video calls.
MLL Telecom Based in Marlow, Bucks, a managed network operator backed by Canadian private equity.
Niche Spectrum Ventures A subsidiary of BT which is believed to want some spectrum for its corporate mobile clients.
Telefonica UK The mobile offshoot of Spain's main telecoms provider, better known as O2.
Vodafone The world's largest mobile phone operator.
- 1 Malaysia Airlines MH17 crash: Pro-Russian rebel 'admits to shooting down plane'
- 2 Israel has discovered that it's no longer so easy to get away with murder in the age of social media
- 3 Israel-Gaza conflict: The myth of Hamas’s human shields
- 4 Amy Winehouse unpublished 2004 interview: ‘Ten years from now I’ll be 30, so I’ll maybe have one baby’
- 5 Dutch paedophile club to fight their ban at the European Court of Human Rights
Malaysia Airlines MH17 crash: Vladimir Putin is given 'one last chance' to end hostilities in Ukraine
The 'scroungers’ fight back: The welfare claimants battling to alter stereotypes
The truth about conspiracy theories is that some require considering
Malaysia Airlines MH17 crash: Ukrainian military jet was flying close to passenger plane before it was shot down, says Russian officer
Malaysia Airlines MH17 crash: Massive rise in sale of British arms to Russia
Malaysia Airlines MH17 crash: victims’ bodies bundled in black bags and loaded onto trains
iJobs Money & Business
£350 - £400 per day: Orgtel: PMO Analyst - Banking - London - £350 -£400 per d...
£300 - £350 per day + competitive: Orgtel: Cost Reporting Manager - MI Packs -...
£35000 - £40000 Per Annum plus 23 days holiday and pension scheme: Clearwater ...
£475 - £525 per day: Orgtel: Test Lead, London, Investment Banking, Technical ...