The Austrian telecommunications commission TKK completed the auction for the 800 MHz, 900 MHz and 1800 MHz frequency ranges, resulting in revenues of approx. EUR 2.014 billion for the Republic of Austria. The total frequency blocks auctioned off were as follows: six in the 800 MHz band, seven in the 900 MHz band and 15 in the 1800 MHz band. All frequencies are technology-neutral to be used for GSM, UMTS and LTE. The frequency assignment procedure will be completed with legal effect when the official decisions are issued in the course of November. The only mobile network operators to participate in the multiband auction were the three current Austrian operators A1 Telekom, T-Mobile Austria and 3 Austria. A total of 28 frequency packages, each consisting of 2x5 MHz, were awarded to the bidders as follows: A1 Telekom acquired 14 packages for approx. EUR 1.030 billion; T-Mobile acquired nine packages for approx. EUR 654 million and Hutchison successfully bid for five packages, paying approx. EUR 330 million. According to a press release from Telekom Austria, A1 Telekom's parent company, A1 Telekom acquired 4 blocks of 800 MHz for total of 40 MHz (including 2 blocks with regulatory conditions to provide mobile broadband to rural areas), 6 blocks of 900 MHz for a total of 15 Mhz (its holding was 20.2 MHz before the auction) and 14 blocks of 1800 MHz for a total of 70 MHz (its holding before the auction was 30 MHz). The company said that it focused on acquiring 800 MHz spectrum and retaining 900 MHz spectrum, but was able to acquire more than planned 1800 MHz spectrum in the so-called complementary round that increased its spectrum holdings by 40 percent for a 3 percent increase in costs. T-Mobile Austria acquired 2 blocks of 800 MHz for a total of 20 MHz, 6 blocks of 900 MHz spectrum for a total of 30 MHz (its holding was 25.6 MHz before the auction) and 8 blocks of 1800 MHz for a total of 40 MHz (its holding was 50.8 MHz before the auction). The third bidder, 3 Austria, did not win any spectrum in the 800 MHz spectrum and acquired 2 blocks of 900 MHz for a total of 10 MHz (its holding was 1.6 MHz) and 8 blocks of 1800 MHz for a total of 40 MHz (its holding was 50.8 MHz before the auction).
The licences for the 800 MHz spectrum are valid until 31 December 2029 and the licences for the 900 MHz and 1800 MHz bands are valid until 31 December 2034. Each of the parties awarded frequencies will be under obligation to ensure that, by means of the frequency spectrum allocated to that operator, a defined level of mobile broadband coverage is provided by a stipulated date. For the 800 MHz frequency band, the auction rules already additionally specified a certain number of municipalities to be supplied service, with the aim of moving forward the expansion of broadband service to poorly covered rural areas. Penalty regulations apply where coverage obligations are not met. The three mobile network operators are required to deposit the frequency licence fee, as determined in the auction procedure, within four weeks of the frequency allocation decision becoming legally effective.
Telekom Austria is happy about the auction result and claims that the current spectrum division has significantly reduced the viability of a potential new mass market mobile virtual network operator (MVNO). The operator will pay for the spectrum via existing cash reserves as well as additional debt. In light of the resulting impact on its balance sheet the Telekom Austria Group intends to achieve deleveraging via operational cash flow generation to support the Group's BBB (stable) target rating. T-Mobile Austria also welcomes the auction result and calls on the Austrian minister for infrastructure Doris Bures to increase the planned rural broadband investment financed by the auction yield from the planned EUR 250 million (half of minimal auction result of EUR 526 million) to EUR 1 billion as the auction results were four times as high as the expected minimum. The operator also points that the auction still leaves a blurry legal issue with regards to the user rights of the 1800 MHz spectrum which will be available from the beginning of 2016 or 2018 (depending on which block), but T-Mobile has the legal usage right for its current 1800 MHz spectrum until the end of 2019. This issue needs to be resolved before operators start paying double for the same spectrum.