The U.K. spectrum auction brought in average bids of only...
The U.K. spectrum auction brought in average bids of only $0.64 per MHz/POP for 60 MHz of the 800 MHz-band spectrum up for sale, well below $1.28 MHz/POP paid for 700 MHz licenses in the U.S. five years ago. Prices…
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for other spectrum sold in the U.K. auction that closed last week (CD Feb 21 p21) were even lower: 140 MHz of 2.6 GHz-band paired licenses sold for $0.13 per MHz/POP and 45 MHz of 2.6 GHz unpaired licenses at just $0.04 per MHz/POP. New Street Research said in a Friday research note that several factors explain why U.K. prices were lower than for comparable U.S. auctions. The U.K. has both more spectrum supply and less demand, the firm said. “The US has 3x the voice traffic and 2x the data traffic per POP,” it said. “When coupled with the fact that the US has less spectrum in total, this has two implications: first, it lowers the value of any new spectrum coming to market in the UK; second, it significantly lowers the value of marginal spectrum (like 2.5 GHz) relative to more ‘mainstream’ spectrum (like 700/800MHz or AWS).” New Street also cited the generally low profits seen by U.K. carriers and the auction structure. “Auction rules were set so that Hutchison could acquire at least 2x5MHz of 800MHz spectrum at a low reserve price of $0.56/MHz-POP. This likely also depressed aggregate auction prices for the 800 MHz band by reducing the starting price and the bidding tension for the other operator,” the report said.