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Australian carrier Telstra has publicly criticised the government’s decision to offer unsold spectrum in the 700 MHz band to its rival Vodafone at a price it says is below market value.
The government has proposed selling the 700 MHz allocation to Vodafone for A$594.3 million. Telstra contends that Vodafone had the opportunity to acquire this spectrum during the 2013 auction but chose not to participate, and that selling the spectrum now outside a competitive auction allows Vodafone to obtain it for less than other operators would have paid.
Vodafone’s absence from the 2013 auction means it is able to pursue acquisition of the spectrum through a different process, rather than competing directly in an open auction. By contrast, Telstra paid A$1,302,019,234 in 2013 to secure 2×20 MHz in the 700 MHz band plus 2×40 MHz in the 2.5 GHz band.
The Department of Communications described Vodafone’s proposal as an “unsolicited proposal” for a licence term of 11 years and nine months. Under the terms presented, Vodafone would pay the full A$594.3 million in three instalments spread over three years.
Regulator ACMA noted in a consultation paper that, as with other unallocated spectrum, interested parties are able to express interest either to ACMA or to the government. ACMA said the government had not received expressions of interest for the unsold 700 MHz spectrum since the digital dividend auction.
ACMA added that in 2014 it consulted with industry and concluded there was no apparent market demand for this specific piece of spectrum at that time. The unsolicited proposal from VHA (Vodafone Hutchison Australia) requests acquisition of 2×10 MHz of the unsold 700 MHz spectrum on an 11-year, nine-month licence for A$594.3 million, payable in three installment payments over three years.
Market figures underscore the broader industry context: according to analyst Katar, Telstra’s market share has risen to 41.1 percent from 39.7 percent the previous year, while Vodafone’s share has fallen from 28.2 percent to 15.2 percent. The availability of the 700 MHz band follows Australia’s transition from analog to digital television, which freed up this valuable spectrum for mobile services.
Do you think ACMA is right to sell the spectrum to Vodafone? Let us know in the comments.