E-Plus plans cost-cutting in Germany

E-Plus, KPN's German cellular subsidiary, has indicated its interest in bidding for the valuable 800MHz spectrum auction that starts next week in Germany. However, the company has admitted that it would take a ‘disciplined, value-driven approach in the auction' which has been taken by observers that other larger operators will likely out bid E-Plus for this spectrum band given its importance for the roll-out of LTE networks.

The company, which markets itself as a cheaper alternative to market leader T-Mobile and rivals, has been criticised for inadequate network investment leaving potential E-Plus subscribers with the perception of providing poor network quality.

E-Plus, which generates a quarter of KPN's €13.5 billion revenue and a quarter of core profit, said it would work to upgrade its network in Germany whether it secures the 800MHz spectrum or not.

The company is also thought to be in talks with other operators regarding network sharing to keep costs in Germany under control, with O2 being seen as the most likely and logical partner. KPN said it could also acquire additional infrastructure at a low cost by striking a deal with Chinese telecom equipment supplier ZTE.

The spectrum auction is expected to gain average bids in excess of €1 billion, with the 800MHz slots considered to be the most attractive, and most expensive, as less additional investment from operators is required to make them suitable for data traffic.

Observers believe that E-Plus might be successful bidding for other frequency slots of 1.8GHz, 2.1GHz and 2.6GHz which could auction for half the price of the 800MHz band.

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Related stories:
German spectrum auction stumbles; nine apply for Dutch frequencies
E-Plus and KPN Belgium to Significantly Expand 3G Networks in Cooperation with ZTE
E-Plus and O2 Germany cosy up
German Digital Dividend auction faces threat of EU legal action

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