Spain sells surplus 5G spectrum for small change

Industry News

Spain has sold off its last two remaining blocks of 3.5 GHz frequencies earmarked for 5G services in an auction that raised next to nothing, compared to many others.

The Ministry of Economic Affairs and Digital Transformation had two 10 MHz blocks of spectrum and two bidders lined up, thus it comes as little surprise that the auction process was speedy.

After two rounds of bidding, Orange and Telefónica both emerged victorious, paying the starting price of €21 million apiece for their new spectrum.

As a result the pair remain the biggest spectrum holders in the 3.5 GHz band, which, as the Ministry and Orange were keen to remind us, is a priority band for offering 5G services. In total, Orange now holds 110 MHz of 3.5 GHz airwaves, and Telefónica 100 MHz, followed by Vodafone with 90 MHz and MásMóvil with 80 MHz.

Incidentally, the 3.5 GHz band covers 3.4 GHz-3.8 GHz. The first half of that band was sold off five years ago, while mid-2018 saw the second half go on the block. In that second sale, Orange, Telefónica and Vodafone together acquired 200 MHz for €437.65 million; Orange and Telefónica added to their existing holdings, Vodafone bought all of its 90 MHz holding, and MásMóvil dropped out of the auction with nothing, but already owned its 80 MHz.

At the time, the Ministry talked up the fact that the sum raised came in at four times higher than the base price. However, it is worth noting that on average the three winning bidders back then paid an average of €21 million-€22 million per 10 MHz. That makes Monday’s auction look right on the money, so to speak.

“The next step will be to reorganize the frequencies so that all operators have contiguous blocks of frequencies and, therefore, make more efficient use of the radio spectrum in the deployment of 5G technology and services,” the Ministry said, in a statement.

Spain is aiming for 75% of the population to have 5G coverage by 2025 via the so-called priority bands: 694 MHz-790 MHz, 3,400 MHz-3,800 MHz and 24.25 GHz-27.5 GHz. Thus, the first prong of its 5G strategy is to make those bands available to operators.

Progress thus far has been a little slow, but the country is working towards selling 700 MHz spectrum in the first quarter of this year, the Ministry confirmed late last year. It added that a 26 GHz allocation process would follow, but did not give any specifics on that.

The government has pledged to make €2 billion of public funding available for its 5G strategy, of which €300 million are included in this year’s budget.

While plans for getting spectrum into the hands of the operators may not yet be fully finalised, the right building blocks appear to be in place for 5G in Spain.

As usual, there are operators jumping the gun though.

Telefónica, for example, launched 5G amid great fanfare last September and trumpeted a goal of 75% population coverage by the end of the year, via its non-standalone 5G network based on 3.5 GHz and mid-band – 1800 MHz-2.1 GHz – frequencies. Whether customers are getting a true 5G experience there is perhaps in question. We might learn more about Telefónica’s 5G progress when it publishes full-year results later this week. However it and its rivals pitch current 5G offerings, it’s clear they are all going to need more spectrum sooner rather than later though.

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