Operators likely to pay £1bn for spectrum in 2012

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New research suggests networks could pay around £1 billion for 800MHz band – a significant drop from 2000 3G spectrum auction prices

Operators are likely to purchase spectrum on the 800MHz band for around £1 billion each when it is auctioned along with the 2.6GHZ frequency next year according to new research from Pricewaterhouse Coopers (PwC).

It has long been anticipated operators will pay significantly less than the £22.5 billion they parted with in 2000, but this figure is one of the first estimated cost prices to be predicted.

The 800MHz and 2.6GHz frequencies will be both be auctioned next year and will eventually be used to implement LTE 4G services in the UK.

PwC telecoms team senior manager Simon Harris said: “The structure of the auction will have an important bearing on the prices paid, but a similar outcome to Germany would not be surprising – in which case an operator may expect to pay up to around £1bn for an 800 MHz licence.”

The total sum raised from the German auction last May was £3.9 billion compared with £30 billion in 2000.

Harris said prices would vary depending on licence conditions.

Harris said: “However, prices could be higher if licence conditions are minimal, or lower if, for example, the licences carry obligations to provide access in rural areas or if value is extracted through a requirement to pay future annual licence fees.”

Ofcom told Mobile News it had no way of predicting how much spectrum would go for.

An Ofcom spokesperson said: “This spectrum is of enormous significance to the future of the UK economy and society as its release will allow the next generation of mobile broadband technology to be deployed quickly and efficiently.

“How much bidders will be willing to pay to acquire it will only become clear when the auction takes place – and this is not a matter that Ofcom considers when taking decisions.

Three, O2 and Everything Everywhere were unable to comment.

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