Telstra, Optus, TPG win 4G spectrum for AU$2 billion

TPG was the surprise entrant in the 4G spectrum auction, which saw the company, along with Telstra and Optus, pick up spectrum in the 700MHz and 2.5GHz spectrum bands for a total of AU$1.96 billion.

The Australian Communications and Media Authority (ACMA) today announced that the three companies had secured the so-called "water front" spectrum after an auction process that lasted several weeks.

Telstra picked up the bulk of the spectrum, buying 2x 20MHz of the 700MHz spectrum band across Australia, as well as 2x 40MHz pairs of spectrum in the 2.5GHz spectrum band for a total of AU$1.3 billion.

Optus came in second, buying up 2x 10MHz of spectrum in the 700MHz band and 2x,20MHz pairs of spectrum in the 2.5GHz band for a total of AU$649 million.

TPG was the surprise winner, picking up 2x 10MHz pairs of spectrum in the 2.5GHz band for a total of AU$13.5 million. TPG currently doesn't have any mobile network infrastructure of its own and resells Optus mobile services.

Vodafone, which had said that it would sit out the 700MHz auction, but would watch the 2.5GHz spectrum auction, did not pick up any spectrum at all. The company has said that it would instead rely on its 20MHz holding for 4G in the 1800MHz spectrum band.

Communications Minister Stephen Conroy said there was 30MHz of spectrum in the 700MHz band left over, and that the government would sell it in the next few years.

"15MHz paired of the 700MHz spectrum, worth in the order of AU$1 billion, remains in the Commonwealth's hands for now, and we intend to return it to the market in the next two or three years," he said.

"The ACMA has previously stated that it should not be assumed any unsold spectrum would be returned to market in the short term, or at a price that is lower than the reserve price set for this auction."

Telstra CEO David Thodey said that the spectrum would help keep Telstra ahead in mobile connectivity.

"This additional spectrum represents a major investment in the future of telecommunications in Australia, and means we can continue to deliver a superior mobile experience for our customers," he said.

"The spectrum will be used to enhance our network to help support extraordinary demand growth for mobile services and data. With the 700MHz and 2.5GHz spectrum, we will be able to deliver faster speeds, more capacity, and expansive wide area coverage of 4G LTE technology on our Next G network."

Optus's chief country officer Kevin Russell said the company was pleased to be able to secure the additional spectrum it needs to deliver 4G.

"The spectrum Optus has acquired in the 700MHz band will provide stronger 4G coverage across both metropolitan and regional Australia, allowing us to expand our 4G services to more customers than ever before," he said.

"The additional spectrum purchased in the 2.5GHz band, when combined with our already substantial holdings in 2.3GHz, will enable Optus to provide unparalleled network capacity for 4G data services to our metropolitan customers."

In a short statement to the Australian Stock Exchange, TPG didn't give any hints as to its plans for the spectrum.

"TPG believes that the 2.5GHz spectrum is a valuable asset, which, with developing technologies, will bring TPG the opportunity to offer innovative and value-adding products to its customers, particularly in the increasingly important wireless broadband market."

A Vodafone spokesperson confirmed that the company decided to bow out of the 2.5GHz auction during the confidentiality phase of the auction due to the cost of investing in a network on a new spectrum band.

"We made the decision not to participate in the 2.5GHz auction during the confidential phase of the auction process, and so we were not able to disclose this publicly until today," she said.

"Building another network on another spectrum band would incur significant costs with limited improvement to customer experience for our customers for the foreseeable future. 2.5GHz spectrum does not offer the same coverage benefits in metropolitan areas as our 1800MHz 4G network, and 700MHz is not currently an extensively used 4G spectrum band internationally, so device options are very limited."