Vodafone, O2 positioned to gain from UK 800MHz auction

Vodafone and O2 could gain a strong marketing advantage having overturned a UK government cap on how much 800MHz spectrum they can bid for in next year's auction.

Industry analysts believe that both operators will outbid competitors thereby enabling them to launch LTE services using the 800MHz band ahead of their rivals that would be forced to use less efficient frequency bands.

Operators, in particular Vodafone, are attempting to gain market share by emphasising the coverage, reliability and speed of their voice and data networks, with availability of 800MHz for LTE services being seen as key to this effort.

"If Vodafone is allowed to bid for lower frequencies [800MHz], it would impose a good deal of pain for the competition," said Will Draper, an analyst at Execution Noble. Vodafone adopted a "refuse to lose" strategy in Germany, pushing up auction prices, Draper said. "In the UK, Vodafone will bid pretty hard for allocations," adding that each local CEO was "empowered to do what it takes to make that happen."

According to Matthew Howett, a telco analyst with Ovum, the UK spectrum could raise similar amounts (€4.38 billion) as seen in the recent German spectrum auction. "The amounts bid in Germany and the US [US$ 19.6 billion] are likely to be indicative of what we will see this time around," Howett said. "The 800MHz was incredibly valued in Germany."

Denmark, Sweden, Norway and France are expected to hold spectrum auctions next year, according to analysts.

For more on this story:
- read Bloomberg

Related stories:
LTE: NSN and Nokia conduct first 800MHz test call
Reserve 800MHz for LTE and WiMAX, states EU commissioner
O2 Germany joins race to deploy LTE
UK Spectrum auction to get green light

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