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Optus, Telstra win big in ACMA spectrum auction

The 1800MHz spectrum auction raised AU$543.5 million, with Optus, Telstra, TPG, and Vodafone all taking a slice of the spectrum band to bring more coverage to regional Australia.
Written by Corinne Reichert, Contributor on

The Australian Communications and Media Authority (ACMA) has announced the results of its 1800MHz spectrum auction, with a total of AU$543.5 million spent between the four major telecommunications providers.

Optus Mobile spent the most, at AU$196 million, followed by Telstra, at AU$191 million; TPG, at AU$88 million; and Vodafone Australia, at AU$68 million.

The high-band spectrum online auction, which began in November, will improve 4G coverage in regional and remote Australia, bringing high-speed broadband to those living outside of the major cities.

The 1800MHz spectrum was auctioned off simultaneously over 179 rounds and 29 working days. According to ACMA chairman Chris Chapman, the auction was highly competitive.

"The 1800MHz band spectrum auction process ran very efficiently, and the simultaneous multi-round ascending auction format proved highly effective in testing the market value of the spectrum and allocating it to those parties that valued it most," said Chapman.

The 1800MHz band is currently used in metropolitan areas by Telstra, Vodafone, and Optus to deliver their 4G networks, but has been primarily used in remote Australia for point-to-point backhaul services. The reallocation of the spectrum will ensure that it is used to bring faster connection speeds to those living in regional areas.

"Due to the high level of international harmonisation of this band for mobile broadband services, industry -- and ultimately citizens and consumers -- will benefit from the flow-on economic and social effects of this allocation process," Chapman said.

"1800MHz spectrum is already used extensively in Australia's major cities, mainly to provide 4G telecommunications. With previously unallocated 1800MHz spectrum in regional areas now in the hands of mobile broadband service providers, the auction should enable improvements to the availability and performance of 4G telecommunications services right across regional Australia."

It was separated into 147 lots, with costs calculated at AU$0.08 per MHz depending on population; spectrum in the 1800MHz band in Darwin began at the reserve price of AU$106,000, while the starting price in Adelaide was AU$1.13 million.

Optus Mobile won spectrum in every Australian state and territory, with five lots of spectrum in the Darwin area, paying AU$4.69 million in total for it; five lots in the North Queensland (Cairns/Townsville) area, paying AU$18.95 million; five lots in Central Queensland (Mackay), paying AU$9.76 million; four lots in South Queensland (Maryborough), paying AU$35.89 million; and five lots in Northern New South Wales (Grafton), paying AU$14.23 million.

It also won five lots in Western NSW (Dubbo), paying AU$7.97 million; four lots in the Australian Capital Territory (including the south coast of NSW), paying AU$29.89 million; four lots in Southern NSW/Riverina (Albury), paying AU$11.29 million; four lots in Regional Victoria, paying AU$29.54 million; four lots in Tasmania, paying AU$16.77 million; five lots in Regional South Australia, paying AU$8.09 million; and four lots in Regional Western Australia, paying AU$5.64 million.

Optus CEO Allen Lew said he was pleased with the result, as it will improve Optus' ability to bring more services to regional and remote Australia.

"When combined with our existing assets, this additional spectrum allows Optus to support Australia's growing demand for data services in regional Australia," Lew said.

"Giving more retail and business customers access to super-fast 4G in more places underpins our strategy to be a mobile-led entertainment company. The use of common frequencies between metropolitan and regional areas will help reduce dead zones across urban and rural boundaries, and give customers a seamless 4G experience when they're on the go."

Telstra fared similarly, winning five lots of spectrum in Darwin, for AU$5.58 million; six lots in North Queensland, paying AU$18.24 million; five lots in Central Queensland, for AU$10.09 million; four lots in South Queensland, for AU$36.63 million; five lots in Northern NSW, for AU$14.82 million; five lots in Western NSW, for AU$7.96 million; two lots in the ACT, for AU$17.22 million; five lots in Southern NSW/Riverina, for AU$15.13 million; four lots in Regional Victoria, for AU$28.15 million; four lots in Tasmania, for AU$22.67 million; six lots in Regional SA, for AU$7.44 million; and five lots in Regional WA, for AU$6.01 million.

TPG bought the third-highest amount of 1800MHz spectrum, with two lots acquired in Darwin for AU$1.92 million; two lots in South Queensland, for AU$16.67 million; two lots in Northern NSW, for AU$4.59 million; one lot in Western NSW, for AU$1.27 million; two lots in the ACT, for AU$15.3 million; two lots in Southern NSW/Riverina for AU$5.4 million; two lots in Regional Victoria for AU$12.69 million; two lots in Tasmania for AU$8.92 million; and two lots in Regional SA for AU$2.58 million.

TPG also purchased the most expensive lot of spectrum, spending AU$15.37 million on acquiring the residual 1800MHz spectrum on offer in Adelaide.

TPG CEO David Teoh welcomed the results of the auction, saying it will enable the company to continue extending its services.

"Following our purchase in 2013 of 2x 10MHz of nationwide 2.5GHz spectrum, this further investment in spectrum represents the beginning of the next exciting chapter in TPG's development," said Teoh.

"Fixed-line broadband has to date been the backbone of our growth, but we believe that wireless connectivity will play an increasing role in the future needs of Australian telecommunications consumers. We have made this significant investment to inject ourselves into that future."

TPG last year acquired rival iiNet in a deal worth around AU$1.5 billion to overtake Optus to become Australia's second-largest fixed-line telco after Telstra, increasing its customer base to 1.7 million.

Vodafone, which missed out entirely on the 700MHz and 2.5GHz spectrum digital dividend auction in May 2013, this time secured 11x 1800MHz of spectrum.

Vodafone bought two lots in North Queensland, spending AU$7.75 million; one lot in South Queensland, for AU$7.91 million; four lots in the ACT, for a hefty AU$37 million; two lots in Tasmania, for AU$12.87 million; and two lots in Regional WA, for AU$2.5 million.

Vodafone has been eyeing regional expansion of late, having last year refarmed its 850MHz spectrum band in the ACT; refarmed an additional 5MHz band of its 850MHz spectrum on the coast of NSW and the eastern edge of the Blue Mountains; and switched on 850MHz 4G in 235 sites across Queensland.

Vodafone Australia CEO Inaki Berroeta again flagged regional expansion plans this week in a bid to bring competition across all areas of the nation to improve choice and therefore pricing for those living in remote areas.

To achieve this, the telco signed a AU$900 million, 15-year dark fibre deal with TPG, which will see TPG build out an extra 4,000km of fibre to connect Vodafone's cell towers across Australia by mid-2018 in an effort to reach more customers. Vodafone has also begun activating 70 base stations across Australia as part of the mobile blackspot program.

"Mobile technology has a big part to play in building a productive and truly national digital economy. By optimising the use of next-generation mobility, we can leverage Australia's strengths in industries such as agriculture, education, transport, healthcare, and tourism," Berroeta said last year.

"It is well understood that telecommunications is a critical area of the economy. It can drive jobs, innovation, and productivity, but a lack of competition and innovation in the sector will hold the economy back."

Just six lots of spectrum went unsold: Two in Central Queensland, and one each in South Queensland, Western NSW, Tasmania, and Regional WA.

Diversity of ownership and therefore competition was promoted during the auction, with no party permitted to acquire more than 2x 25MHz of the available spectrum, in spite of the recommendation to the contrary made by incumbent telco Telstra.

"Spectrum is a finite natural resource. When demand exceeds supply for spectrum in a band, the ACMA commonly allocates spectrum by auction. This provides a transparent process to establish a market price, ensuring licences are allocated to those who value them most highly," Chapman said at the time.

"The ACMA considers that the price paid by bidders at an auction should provide a reasonably accurate indication of the true market value of the spectrum and identify the highest value use of the band."

In May last year, the federal government announced its plan to auction off the regional 1800MHz spectrum, after the ACMA had recommended an auction be held.

The ACMA in September then announced that it had begun accepting applications from telecommunications carriers that wished to take part in the auction.

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