4G bidders to be outed as hopes rise for windfall

OFCOM is this week expected to reveal the bidders for an auction of 4G spectrum, in the next step of a process that could earn the Treasury far more than originally expected.

George Osborne pencilled in a sum of £3.5bn in his Autumn Statement, but recent auctions in other countries have beaten forecasts, as the increasing appetite for mobile data has become apparent.

Dutch authorities revealed over the weekend that the country raised €3.8bn (£3bn) in its own 4G auction, a sum many times more than forecast, while a recent Irish sale also beat expectations.

Buying a slice of the 4G airwaves will allow networks to offer mobile internet speeds up to 10 times as fast as 3G. With recent Ofcom figures showing that UK smartphone users are the world’s most data-hungry, operators could be more eager than ever to get their hands on spectrum.

A bigger windfall will come as a boost to Osborne, who has only been able to reduce the budget deficit this year by relying on the proceeds of the upcoming auction.

“The Dutch auction showed there is more value to the spectrum and the reason is more demand,” Brian Potterill, a director in PwC’s telecoms strategy team, told City A.M. “We had an estimate of between £2bn and £4bn but I think we’re now looking at the high end of that. The auction is designed to extract value.”

Applications opened for January’s auction last week, and Ofcom chief Ed Richards is expected to reveal candidates at the end of the week. They will include EE, O2, Vodafone and Three, although BT has also expressed an interest in some spectrum.