O2 boss says 4G auction forecast contained flaws

GEORGE Osborne should never have expected to raise the £3.5bn he had banked on from an auction of 4G mobile spectrum, the chief executive of O2 has said.

Ronan Dunne, the boss of the UK’s second-largest mobile network, told City A.M. that the £2.3bn raised for the Treasury was “not actually a surprise to us” and that “what was raised was broadly what we anticipated”.

Osborne was dealt a blow last week when Ofcom’s auction of airwaves for the next generation of high-speed networks raised £1.2bn less than the £3.5bn the Treasury had banked on receiving, based on an estimate from the Office for Budget Responsibility.

However, Dunne said that the lower-than-forecast cost of the spectrum would mean that networks could use the cash to roll out 4G networks faster than if they had spent extra.

An accelerated rollout will boost the economy far more than extra income for the Treasury would have, he added.

Ofcom estimates that 4G will add £20bn to the economy over the next 10 years.

“I genuinely don’t think George Osborne should be that concerned,” Dunne said.

“This is not about just buying spectrum, it’s about investing in innovation for products and services that can utilise the benefit of high speed mobile access, and in truth I think because we didn’t overpay for mobile spectrum there’s more money left for both rolling out fast.”

At £550m, O2 spent less than its rivals Vodafone and EE in the auction, although Dunne said the network buying less spectrum will not mean an inferior 4G service. “We’re very comfortable with what we’ve done,” he said.