Bloomberg News

Germany Plans 2014 Auction for 700-MHz Mobile Spectrum, FAZ Says

June 19, 2013

Germany plans to auction a new batch of long-range wireless spectrum to mobile service providers next year to counter a capacity squeeze facing carriers like Deutsche Telekom AG (DTE) and Vodafone Group Plc (VOD), Frankfurter Allgemeine Zeitung reported.

The country’s Federal Network Agency plans to allocate frequencies in the 700-megahertz spectrum used by television broadcasters to offset the increasing strain that transfers of videos and music to mobile devices place on networks, the newspaper said, citing internal documents. Agency officials didn’t immediately respond to calls and an e-mail yesterday seeking comment.

The first auction of licenses to use airwaves in the so-called digital dividend range, which have been used to roll out long-term evolution, or LTE, signals in rural parts of the country, raised 4.38 billion euros ($5.9 billion) in 2010. The reported timing is earlier than expected and may put strain especially on the finances of the smaller carriers, including Telefonica Deutschland Holding AG (O2D) and Royal KPN NV, JPMorgan Chase & Co. analyst Hannes Wittig said by phone.

“A 2014 date would increase the pressure on operators,” said London-based Wittig. “Investors would probably worry most about the financial impact on Telefonica Deutschland and KPN; however, an earlier date could also be seen as a reason to accelerate discussions regarding a potential merger of the two smaller carriers.”

KPN, headquartered in the Hague, and Telefonica SA (TEF), the Madrid-based parent of Telefonica Deutschland, last year dropped discussions about a combination of their German units. KPN’s E-Plus and Telefonica Deutschland with its O2 brand vie for the number three spot in that market.

Dividend Cut

KPN cut planned dividends after spending 1.35 billion euros on wireless spectrum in its Dutch home market. Unlike Telefonica Deutschland, which sold shares in an initial public offering last year, KPN didn’t obtain any long-range frequencies in 2010.

The amount of spectrum of around 700 MHz is similar to the amount of 800 MHz spectrum that Germany sold in the 2010 auction, Wladimir Bocquet, senior director of spectrum policy at the wireless industry group GSMA, said in a phone interview.

The network regulator is also working on decisions for the future allocation of old spectrum licenses expiring in 2016, FAZ reported. Operators have called for these licenses to be extended rather than redistributed.

To contact the reporter on this story: Cornelius Rahn in Berlin at crahn2@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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