stockmarket

Bidding picks up again in Germany's 5G mobile spectrum auction


© Reuters. FILE PHOTO: Jochen Homann (2ndR), president of Germany’s Federal Network Agency (Bundesnetzagentur) and board members Rüdiger Hahn, Wilhelm Eschweiler and Peter Franke (L-R) pose behind a stopwatch for the symbolic start prior to the auction of 5G spectru

By Douglas Busvine

FRANKFURT (Reuters) – Bidding has accelerated again in Germany’s auction of frequencies for next-generation 5G mobile networks, reducing chances that the four companies taking part will bag spectrum at bargain prices.

Action had slowed to a trickle this week with new bids in each auction round dwindling to just a few million euros, fuelling speculation the auction could end up being Germany’s cheapest ever.

The auction is being held in an old army barracks, with teams sequestered in separate rooms submitting offers via a secure network. The process, which can run for weeks, ends only when there are no new bids.

Bidding picked up again on Wednesday afternoon with Deutsche Telekom (DE:) ending the day in a dominant position. As of Thursday morning, the total amount pledged was 2.9 billion euros (£2.5 billion).

Graphic: Germany’s 5G Auction – Incremental Bids (https://tmsnrt.rs/2VnFafE)

Germany is auctioning 41 blocks of spectrum in the 2 gigahertz and 3.6 GHz bands. Analyst Usman Ghazi at Berenberg Bank had forecast that, in a benign scenario for operators, proceeds could total around 3 billion euros.

His base-case scenario sees 4-5 billion euros in proceeds, while a worst-case outcome would be upward of 8 billion euros – roughly in line with a costly 5G auction in Italy last year that has put operators’ finances under pressure.

New entrant 1&1 Drillisch had been bidding up the cost of spectrum in the 2 GHz band – which is more suited to running 4G services – to levels that Ghazi called irrational.

Drillisch, run by billionaire Ralph Dommermuth, had been on the ropes earlier in the process, with dibs on just one spectrum block, but came back in Round 97 with a massive bid to signal the seriousness of its intent.

Graphic: Germany’s 5G Auction – Total Raised (https://tmsnrt.rs/2HWVDEu)

Analysts note that Telefonica (MC:) Deutschland, the market No.3 by revenues, has been passive in the 2 GHz band and speculate that it may have a reserve of existing adjacent spectrum to draw on for its network.

Bids are lower for spectrum in the 3.6 GHz band, which has higher data-carrying capacity and is suited to 5G applications such as running networked “smart” factories.

As of Round 126 https://www.bundesnetzagentur.de/_tools/FrequenzXml/Auktion2019_XML/126.html, Deutsche Telekom was leading in 12 blocks, Vodafone (LON:) in 11, Drillisch in 10, and Telefonica Deutschland in just two. Bids had been withdrawn on the other six blocks.

Germany’s 4G spectrum auction in 2015 ended after raising 5.1 billion euros. A previous auction in 2010 went on for six weeks and ended after 224 rounds of bidding.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.