Wednesday 17 March 2021 2:19 pm

BT and Vodafone shares rise on cut-price 5G spectrum auction

Shares in BT and Vodafone pushed higher today after the mobile networks secured bargain deals in the latest auction of 5G airwaves.

Regulator Ofcom this morning said that it had raised £1.4bn from the sale of additional capacity to support 5G mobile coverage.

The figure was well below analyst forecasts, leaving the telcos with more money to invest in infrastructure to roll out their networks.

Shares in EE owner BT rose almost six per cent, while Vodafone pushed 1.2 per cent higher.

All four of the UK’s major mobile networks bid and won a portion of the offering, with all the proceeds to be paid to the Treasury.

In total, 200 MHz of spectrum were available for bidding, split into 80 MHz of spectrum in the 700 MHz band and 120 MHz of spectrum in 3.6-3.8 GHz band.

EE paid a total of £452m across both bands, while Hutchinson 3G paid £280m for 20 MHz of the 700 MHz band.

Telefonica paid £448m for a similar package to EE, while Vodafone shelled out £176.4m for 40 MHz in the 3.6-3.8 GHz band.

Telecoms analyst Paolo Pescatore described the auction as a “perfect outcome for all parties, except for maybe the UK government that hoped to raise much needed funds to reduce its burgeoning debt”.

 Peter Grimmond, head of technology for EMEA at Veritas Technologies described the prices as a “steal”.

“UK operators will be able to increase spectrum by over 22 per cent as a result of today’s auctions and, at a cost of only £1.36bn, are likely to have the money in the bank to accelerate investment in the backend infrastructure required to deliver much greater capacity,” he said.

The auction will now move to the assignment stage, where the companies will bid for the frequency positions they prefer for the airwaves they have secured in the principal stage.

Ofcom’s spectrum director Philip Marnick said: “With bidding in the principal stage concluded, we now move to the next stage of the auction where the operators will have an opportunity to negotiate the position of their spectrum holdings in the wider band.

Before the Open: Get the jump on the markets with our early morning newsletter

“This is an important step forward in bringing better mobile services to people – wherever they live, work and travel. These airwaves will help improve coverage for the mobile services people use today, as well as supporting the UK’s position as a world leader in 5G.”

Pescatore added that people should “expect to see some haggling behind closed doors” in the assignment stage, adding: “Fingers crossed this new spectrum can be used by the summer.”

Telefonica owner O2’s chief executive Mark Evans said he was delighted with the company’s successful bid.

“This demonstrates Telefonica’s continued commitment to the UK market and the very best connectivity for our customers. We are delighted with the result, which secured the right spectrum at a fair price”, he said.  

Ahmed Essam, chief executive of Vodafone UK, said:  “This auction will boost our 5G network capacity. It means we will have the spectrum we need to further the roll-out of 5G to our customers, bringing high speed connectivity and opening up new opportunities for products and services.”

Three boss Robert Finnegan said the company was “delighted” with the outcome. “This triples the amount of low frequency spectrum we own and will have a transformative effect on our customers’ experience indoors and in rural areas.”