Tuesday, 17 November 2015

Hutchison Whampoa (Three) gets some valuable spectrum in the 1.47 GHz space for around £100M

As expected, Ofcom has now rubber-stamped the L-band deal which saw Qualcomm sell a portion of its spectrum to Vodafone and Three, publishing a statement on the matter.

Vodafone has bought the 1452-1472MHz frequencies, and (the soon-to-be-merged-with-O2) Three's spectrum at 1472-1492MHz.

Spectrum is a touchy subject, but this must have been one of the easiest decisions ever for the UK regulator.

Indeed, when it put out a public consultation on the sale it only got one response – of the opinion that selling spectrum to someone who might actually use it was A Good Thing.

So that's unanimous then. Ofcom looked at how fit and proper Vodaphone and Three were to buy the spectrum and concluded that both companies seemed to know precisely what they were doing with the spectrum they already had, so purchase away.

More interestingly, the regulator looked at how it affected the allocation of spectrum between the operators. Unusually, it deemed 1400MHz as “low frequency”, more akin to 800MHz and 900MHz than the 1800MHz and 2600MHz bands, although EE's total spectrum holding is so much greater than that of Vodafone, and more than twice that of Three, that it’s not going to distort the market.

When BT merges with EE the combined company will have even more of a holding – and when O2 and Three merge the shares will all be roughly equal.

Funnily enough virtually nobody has shown much interest in L-band in the past, and its main use is likely to be as an ideal aggregated carrier to provide more 4G and 5G bandwidth. However, recently both CEPT, the European Conference of Postal and Telecommunications Administrations, and the GSMA have highlighted L-band as being a useful frequency for global use.

Strangely financially silent, none of the parties involved in the sale will say quite how much the spectrum went for. Since Qualcomm paid just £8.3m, but when – the day before the official announcement – we suggested a huge profit was being made (I.e. tenfold! and more than £100m), one person who claims to know intimate details of the clever deal let it slip that Vodafone and Three paid a bit more than £100m each. Interesting L-band spectrum times ahead, perhaps?

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