Phone firms ready to splash out on 4G spectrum

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Hopes that next year’s sale of 4G airwaves could generate a windfall for the Government have been fuelled by successful auctions in other countries.

Mobile operators in the Netherlands paid a total 3.8bn euros (£3.1bn) for the country’s 4G spectrum on Friday, easily surpassing expectations of about 450m euros (£366m). In Ireland last month, operators overcame a challenging economy to generate 854m euros (£700m).

Brian Potterill, PwC’s director of telecoms strategy, now expects the UK’s 4G auction will raise the high-end of his previous £2bn to £4bn estimate.

Despite many operators finding it increasingly difficult to boost returns from mobile data, he said demand for capacity was showing no sign of relenting.

Shares in Vodafone, which bought 1.4bn euros (£1.1bn) worth of the Dutch spectrum, were down 2 per cent on concerns it could spend more than expected when it comes to the UK’s turn to sell mobile frequencies.

Telecoms regulator Ofcom has placed a reserve price of £1.3bn on the 4G sale but the Government’s tax and spending watchdog this month estimated a £3.5bn boost to the public finances.

Industry analysts at Ovum have cautioned against speculating on how much the UK could raise through the 4G sale.

Its regulation analyst Matthew Howett said: “Trying to guess how much money a spectrum auction can raise is a bit of a fool’s game.

“It depends on bidding strategies and you don’t know how people will behave when they go into an auction.

“We were all taken by surprise when the Government came out with the £3.5bn value. If they wanted to include any value it should probably have been the reserve price Ofcom has set of £1.3bn.”