Norway raises €212M from auction, names backer of Telco Data

Norway's telecoms regulator said it raised around €212 million ($292 million) from its recent spectrum auction, and also named the backer of mystery new entrant Telco Data as Access Industries, a holding company founded and chaired by Ukrainian-American billionaire Leonard Blavatnik.

The Norwegian Post and Telecommunications Authority (PT) announced on Friday that TeliaSonera, Telenor and newcomer Telco Data all won blocks in the 800 MHz, 900 MHz and 1800 MHz frequency bands, although the local unit of Tele2 confirmed that it failed to get its hands on any new spectrum resources. The licences are valid for 20 years starting Jan. 1, 2014.

According to Reuters, aside from Telco Data and mobile data and voice services provider ice.net, Access Industries is not known to have other business interests in Norway. Ice.net also operates in Denmark and Sweden under the Net 1 brand. PT also said Telco Data confirmed it will cooperate closely with ice.net and will present further information about its plans in the new year.

The win by Telco Data ushers in a new entrant on the Norwegian mobile market, although existing player Tele2 is clearly disappointed by its failure to win any spectrum in the auction.

"We are obviously not satisfied with the outcome of the auction, but we have a strong position in Norway that we will build on," Tele2 CEO Mats Granryd said in a statement on Friday. "Our own network covers about 75 per cent of the population, and we will continue to offer Norwegian mobile customers affordable and simple mobile services."

According to Graham Friend, managing director, Coleago Consulting, the outcome of the Norwegian auction represents the first real "upset" in Europe where an existing operator has failed to secure spectrum. He blamed this on the choice of auction format, where the highest bidders win.

"Tele2, as the smallest player in the Norwegian market, may well have taken the view that it only needed to outbid a new entrant and that a new entrant would have had a very low valuation," Friend said. "As a result, Tele2 may have decided to shade (i.e. bid less than the value it placed on the spectrum) very aggressively in the hope of securing spectrum at a low price and thus create significant value."

Friend added that the combination of very aggressive shading from Tele2 and a "super charged new entrant business case" is likely to have generated the upset. In fact, Telco Data ended up paying the most of all three eventual winners, and was clearly bidding to win.

Some analysts suggest the outcome could lead to cooperation between Telco Data and Tele2.

"We believe a structural solution between Tele2 and TelcoData is likely, which should mitigate the long-term margin implications," Jon David Gjertsen, an analyst at Pareto Securities, wrote in a note to clients, Reuters reported.

For more:
- see this Reuters article

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