Treasury expecting £3.5bn 4G auction windfall

THE GOVERNMENT expects to raise £3.5bn from next year’s auction of the mobile airwaves needed to run high-speed 4G services, George Osborne said yesterday.

The windfall will boost the Treasury’s coffers, and will flatter this year’s deficit figure, but will be far less than the £22.5bn raised in 2000’s 3G auction. In fact, the £3.5bn figure from the Office for Budget Responsiblity comes at the top end of some estimates.

Brian Potterill, a director in PwC’s telecoms strategy team, told City A.M. there is “a degree of uncertainty” about how much the Ofcom-run auction will fetch, putting his estimates at between £2bn and £4bn.

“This is a long way short of 3G but consistent with the amount being raised elsewhere,” Potterill said. Other countries have run similar auctions in recent months, with Ireland’s sell-off last month raising significantly more than expected.

Ofcom will sell the separate lots of spectrum cleared for 4G services in January, with the mobile operators desperate to get a slice of the airwaves that will allow them to run high-speed mobile internet networks.

However, recent developments may affect the amount that Ofcom will be able to raise. EE won clearance in the summer to launch a 4G network on spectrum it already owns, while Three has signalled that its intentions lie in boosting its current 3G networks.