Telecom snaps up final 700MHz block

Single block of "digital dividend" spectrum reaps NZ$83 million for the government

Telecom has won an auction for the final 10MHZ of 700MHz radio spectrum freed up as a result of the shutdown of analog television services in New Zealand.

Telecom bid NZ$83 million plus GST for the final block after paying just NZ$22 million each for the three blocks it bought in October.

Vodafone and Telecom were reported to be in a ding-dong battle for the block, each raising it bid daily.

In total, the "digital dividend" auction sale has now reaped NZ$259 million.

The Ministry of Business, Innovation and Employment, which ran the auction process, said Telecom’s bid is conditional on it obtaining clearance from competition regulator the Commerce Commission to acquire the spectrum.

In the first round of the auction last October, three bidders were each entitled to bid for three 10MHz blocks of spectrum. However, challenger mobile operator 2degrees only bid for two blocks, leaving one block unsold.

The results of the 700MHz auction are, subject to Commerce Commission clearance, therefore: Telecom bought two 20MHz (four blocks); Vodafone bought two 15 MHz (three blocks), and; 2degrees bought two 10MHz (two blocks).

A final assignment process, during which each successful bidder will bid for a location within the spectrum band, is still to be held.

2degrees argued for a delay before the sale of the final block but was unsuccessful.

Bidders who buy three blocks of radio spectrum must build at least five new cell sites each year, for five years. Telecom, with four blocks,  will be required to build ten new cell sites each year for five years, in areas that it does not currently cover.

As the auction conditions are designed to ensure that at least 90 per cent of New Zealanders have access to a 4G network, all successful bidders also have to upgrade 75 per cent of their existing rural cell sites to 4G, up to a maximum of 300 sites.