Telstra, Optus, TPG-Vodafone win 5G spectrum

Telstra paid AU$386 million for 143 lots; Optus paid AU$185 million for 47 lots; the TPG-Vodafone Australia joint venture paid AU$263 million for 131 lots; and Dense Air Australia paid AU$18.5 million for 29 lots.
Written by Corinne Reichert, Contributor

The Australian Communications and Media Authority (ACMA) has announced the results of its 5G spectrum auction, with Telstra winning the most lots in the 3.6GHz band.

In total, Telstra paid AU$386,008,400 for 143 lots; the TPG-Vodafone Australia joint venture Mobile JV paid the next most, at AU$263,283,800 for 131 lots; Optus paid AU$185,069,100 for 47 lots; and Dense Air Australia paid AU$18,492,000 for 29 lots.

"This spectrum is recognised internationally as a key band for 5G services. Timely release of 5G-compatible spectrum will facilitate the early delivery of next generation 5G services to the Australian public and industry," ACMA Chair Nerida O'Loughlin said on Monday morning.

The ACMA made AU$853 million from the spectrum auction, the equivalent of around AU$0.29/MHz/pop.

The 3.6GHz spectrum licences will commence in March 2020, but carriers can access them earlier, and will continue until December 13, 2030.

"Existing licensees have generally been provided an extended period in which they can continue to use this band. During this period, their rights are protected," O'Loughlin added.

Telstra CEO Andy Penn pointed to his telco's early 5G launches across the nation, saying Telstra will continue leading in 5G.

"This is an extremely significant moment for Telstra and as we set out last week at our Investor Day, 5G will bring enormous opportunities for growth. This is also a significant investment in the nation's future connectivity, including large holding of regional spectrum, demonstrating our continued commitment to bring the latest technology to Australians in regional areas," Penn said.

"Telstra is leading the way in working with suppliers and international standard bodies to develop the 5G ecosystem. This will enable us to provide the data, connectivity, low latency, and speed necessary to enable new products and services ... we are very pleased with the outcome of the auction."

Telstra acquired 12 lots in Sydney; 12 in Melbourne; seven in Adelaide; six in Brisbane; six in Canberra; six in Perth lower band; 10 in North Queensland; 10 in Central Queensland; 10 in Regional Northern NSW/Southern Queensland; 13 in Regional Southern/Western NSW; 10 in Regional Victoria; 10 in Tasmania; 15 in Regional South Australia; and 16 in Regional Western Australia.

TPG-Vodafone acquired 12 lots each in Sydney, Melbourne, Canberra, Brisbane, and Adelaide; three lots in Perth lower band; nine in Perth upper band; eight each in North Queensland, Central Queensland, Regional Northern NSW/Southern Queensland, Regional Victoria, and Tasmania; six in Regional Southern/Western NSW; four in Regional South Australia; and nine in Regional Western Australia.

Optus' 5G spectrum holdings were limited to seven lots each in North Queensland, Central Queensland, Regional Northern NSW/Southern Queensland, Regional Victoria, and Tasmania; and six lots each in Regional Southern/Western NSW and Regional South Australia.

Lastly, Dense Air Australia -- which describes itself as an operating company under the Airspan Group that provides "wholesale shared neutral host LTE 4G mobile network densification and extension services", who has also been acquiring 2.6GHz mobile spectrum across New Zealand -- acquired seven lots each in Brisbane, Canberra, and Perth lower band; one each in Melbourne and Sydney; and six in Adelaide.

Optus said it was excluded from buying metro spectrum due to its already significant holdings across the 3.6GHz band, but said its new spectrum would enable it to launch 5G across cities, regions, and holiday locations.

"We are committed to commercially launching fixed-wireless access services early in 2019, and we can now extend these services to Regional Australia," Optus Networks MD Dennis Wong said.

The news follows Australian Competition and Consumer Commission (ACCC) Chair Rod Sims telling Senate Estimates in October that while allowing Vodafone and TPG to jointly bid for 5G spectrum would reduce competition during the auction, it will have the opposite effect for the telecommunications market.

Vodafone CEO Inaki Berroeta said winning the spectrum would allow the merged company to continue preparing for 5G, but said the federal government should make more 5G spectrum available.

"We have been preparing for the evolution to 5G for several years, and the acquisition of spectrum licences in metropolitan, outer metropolitan, and regional areas brings 5G another step closer to reality," Berroeta said.

"The 60MHz holdings the JV has secured in Sydney, Melbourne, Brisbane, Adelaide, Perth and Canberra give us a strong 5G spectrum capability in each of these major cities."

"We are in the final stages of virtualising VHA's core network. We have completed our dark fibre transmission rollout and are finalising our detailed infrastructure planning, while leveraging the expertise of our global shareholders.

"Launching a new generation mobile network is a multi-layered evolutionary process which involves much more than putting some new antennas on poles, and we are progressing all elements of our 5G plans."

The ACMA finalised arrangements for the 3.6GHz 5G spectrum auction back in August, saying it would be held in late November with allocation limits of 60MHz in metro areas and 80MHz in regional areas.

The ACMA auctioned off 125MHz of spectrum in the 3.6GHz band in total -- 350 lots across 14 regions of Australia, with the metro spectrum reserve priced at AU$0.08 per MHz per population excluding Perth lower lots and AU$0.053/MHz/pop for Perth lower lots.

The regional spectrum started at AU$0.03/MHz/pop, with all lots auctioned off in an enhanced simultaneous multi-round ascending format.

The federal government's 5G policy paper was released in October 2017, announcing that the ACMA would bring the 3.6GHz spectrum band for 5G use to auction in 2018, followed by millimetre-wave (mmWave) spectrum in 2019.

Alongside the announcement of a merger, TPG and Vodafone in August said they would join forces via a joint venture to bid for the 5G spectrum, which will proceed regardless of whether the merger is approved.

TPG CEO David Teoh said a merged entity combining his company with Vodafone Hutchison Australia would be "very aggressive", and would form a telecommunications giant that is said to have an enterprise value of around AU$15 billion.

The new TPG will see Vodafone Australia CEO Inaki Berroeta serve as CEO and Teoh as chair, and will produce revenue of AU$6 billion, EBITDA of AU$1.8 billion, and have an operating free cash flow of AU$900 million, the companies claimed.

Updated at 1.20pm AEDT: Added comments from Optus

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