IHS Global Insight Perspective | |
Significance | The sole bidders for 900-MHz and 1,800-MHz spectrum have succeeded. |
Implications | Orange Spain won 900-MHz spectrum to boost its mobile data network, while Yoigo will expand its network footprint with 1,800-MHz frequencies. |
Outlook | The next item on the agenda for the Ministry of Industry will be licensing the 800-MHz and 2,600-MHz spectrum bands. |
The Spanish government has confirmed that mobile operators Orange Spain and Yoigo have won spectrum as the only bidders in beauty contests for 900-MHz and 1,800- MHz spectrum respectively (see Spain: 24 May 2011: Orange Spain and Yoigo Submit Only Bids for 900- and 1,800-MHZ Spectrum).
Orange Spain was successful with its 900-MHZ bid of EUR126 million (USD180 million) for the licence fee, with EUR433 million pledged in investment over three years. Orange has access to 5 MHz of paired spectrum until 31 December 2030 in a technology-neutral licence. The France Telecom-owned unit is committed to investing EUR204 million to cover towns with less than 5,000 inhabitants.
Yoigo has received two 5-MHz blocks of paired 1,800-MHz spectrum and a further 4.8-MHz block of paired 1,800-MHz spectrum. It will pay a licence fee of EUR42 million, in addition to capital expenditure (capex) of EUR300 million. Like Orange, Yoigo’s licence is technology-neutral and lasts until 31 December 2030.
Outlook and Implications
- Next Round of Licensing: The next item on the agenda for the Ministry of Industry will be the licensing of 800-MHz and 2,600-MHz spectrum. The auction is set to be fiercely contested, with operators keen to gain frequencies to use as part of an LTE network. Telefónica and Vodafone, which were restricted from the 900-MHz and 1,800-MHz auctions, will be present in the next round. In addition, there will be strong competition from cable operators keen to upgrade from mobile virtual network operator (MVNO) status to full-service operators.
- Orange to Boost Mobile Data: Orange Spain will use the extra frequencies to improve its mobile data network. The 900-MHz spectrum will allow Orange to move mobile data traffic off its existing 1,800-MHz and 2,100-MHz networks. In addition the 900-MHz spectrum covers a large area, boosting its coverage in rural areas. As part of its plans to expand into second place in the Spanish market, Orange Spain is looking to fixed and mobile convergence, which will be bolstered by further mobile data spectrum (see Spain: 2 June 2011: Orange Spain Eyes Aggressive Expansion Plan to Become Second Largest Operator).
- Yoigo to Expand Coverage: Yoigo has two main aims for the new spectrum: network expansion and capacity easing. The 1,800-MHz spectrum travels further than Yoigo’s existing 2,100-MHz spectrum, so it will use the extra spectrum to expand its coverage beyond what it could reasonably achieve with just 2,600-MHz spectrum. Furthermore, the fact that it has bid for three blocks of spectrum indicates that Yoigo is also looking to ease spectral capacity constraints with the extra spectrum.