Telstra, Optus and TPG have secured wireless spectrum in the digital dividend auction, collectively forking out just under $2 billion, the Australian Communications and Media Authority (ACMA) has revealed.
Telstra was the highest bidder, putting down $1.302 billion, purchasing 40 MHz of the 700 MHz band and 80 MHz of the 2.5GHz band.
Optus spent $649.1 million on 20 MHz of the 700 MHz band and 40 MHz of the 2.5 GHz band.
TPG was the surprise bidder, purchasing 20MHz of the 2.5 GHz band for $13.5 million.
The spectrum enables telecommunications carriers to deploy next generation of wireless broadband technologies, including Long Term Evolution (LTE) or 4G. Spectrum licences have a term of 15 years, and the telco's will have to make their payments by the third quarter of 2014.
Communications minister, Senator Stephen Conroy, said 15MHz paired of the 700 MHz spectrum, which is worth about $1 billion, will remain in the Commonwealth’s hands for now, with the intention to return it to the market in the next two or three years.
“The ACMA has previously stated it should not be assumed any unsold spectrum would be returned to the market in the short term, or at a price that is lower than the reserve price set for this auction,” Conroy said in a statement.
Four companies initially applied to participate in the auction, but Vodafone Hutchison Australia withdrew before the auction started on April 23.
Telstra CEO, David Thodey, said the spectrum will be used to enhance Telstra's network and support the growing demand for mobile services and data.
“The low-frequency nature of 700MHz means the mobile signal can travel relatively longer distances, which is ideal for improving the services we can offer to customers in rural and regional areas. It also means better in-building coverage in metro and suburban areas," Thodey said.
Telstra stated the spectrum allocations will be financed predominantly through debt.
The licence for the 2.5 GHz band is set to commence on October 1, next year except in Perth metro and regional Western Australia which commences on February 1, 2016 and for the 700 MHz band on 1 January 2015.
Optus CEO consumer Australia and chief country officer, Kevin Russell, the spectrum it has acquired in the 700 MHz band will provide stronger 4G coverage across both metropolitan and regional Australia, allowing it to expand 4G services to more customers than previously.
“The additional spectrum purchased in the 2.5 GHz band, when combined with our already substantial holdings in 2.3 GHz, will enable Optus to provide network capacity for 4G data services to our metropolitan customers,” Russell said.
TPG stated the 2.5GHz spectrum is a valuable asset, giving it the opportunity to offer innovative and value-adding products to customers, particularly in the wireless broadband market.
“The auction process itself ran smoothly and resulted in the allocation of spectrum to the companies that valued it the most,” ACMA Chairman, Chris Chapman, said. “This decades-long process of spectrum reform has already transformed the television industry, delivering greater diversity and better technical quality of television services to viewers. It will be complete when the new licences in the 700 MHz band become operational at the beginning of 2015.
“By making spectrum previously required for analog television transmissions available to meet rising demand for high-speed wireless broadband, the digital dividend auction will well position the Australian telecommunications industry to deliver fast, ubiquitous and symmetrical mobile broadband connectivity to consumers and industry.”