The French government will hold an auction for fourth-generation (4G) mobile spectrum by the end of this month. The government will raise roughly €2.5 billion by providing several frequency bands to French operators, thereby changing their competitive positions.
The French 4G auction will offer 30 megahertz (MHz) of spectrum in the 800 MHz band and 70 MHz of spectrum in the 2.6 gigahertz (GHz) band. The 800 MHz band will be available for a minimum of €1.8 billion while 2.6 GHz will be price at €0.7 billion. The 800 MHz spectrum is suitable for the deployment of 4G services in rural areas while the 2.6 GHz spectrum suits urban areas.
Notably, the French government would put caps on operators’ bids. These caps will allow the smaller operators to acquire some spectrum, ensuring fairness in competition. A single operator will not be allowed to bid for more than 15 MHz of spectrum in the 800 MHz band.
Given the surge in data traffic demand, we believe the French operators will try to make the most of this unique opportunity and apply to the auction process. Winning frequencies will aid operators to upgrade their wireless network and increase download speeds.
The smaller operators, Vivendi’s SFR, Bouygues (EN.PA) and Iliad (ILD.PA) are forcing the French government to impose limits on bidders while France Telecom (FTE), the world’s largest telecommunications carrier, has requested the regulator not to enforce too many conditions.
All French operators irrespective of whether they hold third-generation (3G) mobile licenses, can submit their bids by the end of September. The results of the 2.6 GHz spectrum auction will be announced in October while the 800 MHz auction will be made public in early 2012.
German and Indian regulators recently auctioned out their spectrums at huge prices. The ongoing 4G spectrum in Spain is estimated to raise €1.5-€2 billion.
Upon completion, the French auction will open doors to network gear suppliers such as Alcatel-Lucent (ALU) and LM Ericsson Telephone Co. (ERIC) for undertaking network upgrades for operators.
ALCATEL ADS (ALU): Free Stock Analysis Report
ERICSSON LM ADR (ERIC): Free Stock Analysis Report
Be the first to comment