Telecom NZ snaps up final 4G block

24 Jan 2014

Telecom New Zealand has won an auction for the final 10MHz lot of 700-MHz spectrum that was left unsold from last year’s 4G auction.

The incumbent carrier said it bid NZ$83 million ($68.7 million) for the final 2x5MHz block.

Telecom chief executive Simon Moutter said the fourth lot will provide significant benefits to customers in terms of the potential speed and capacity of the company’s 4G mobile network.

“The more of this 700MHz spectrum a carrier has, the faster the speeds it will be capable of offering and the more data it can carry, so this fourth lot puts Telecom in the best position in the market to deliver a very high-performance 4G mobile network for New Zealand, including in less densely populated areas,” Moutter said.

Telecom NZ, which launched 4G network on a higher frequency band of 1800-MHz in November, will add this fourth spectrum lot to the three lots (2x15MHz) of 700-MHz spectrum it won last year.

In the first round of the 700-MHz auction, concluded on October 30, 2013, Telecom NZ and rival Vodafone each paid NZ$66 million for 2x15MHz block of spectrum, while smaller and newer operator 2degrees secured two 2x10 MHz lots for NZ$44 million.

In total, the New Zealand government has raised NZ$259 million ($215 million) from the auction of the “digital dividend” spectrum, which has been freed up by the closure of analog television.

As part of the auction's conditions, the mobile operators will have to upgrade existing rural cell sites to 4G capability within five years and continue to expand their coverage. That’s to ensure that at least 90% of New Zealanders have access to a 4G network within five years.

The assignment process, during which each successful bidder will bid for a location within the 700-MHz band, is still to be held, Telecom NZ noted.

According to Telecom NZ, the auction for the fourth lot has proceeded over recent weeks at NZ$1 million increments for each bidding interval, starting from the NZ$22 million reserve price.

The significant price premium over the reserve price reflects the customer benefits that this additional fourth lot will provide to Telecom’s mobile network in future years, the telco said.

“We’ve now got a leading data network integrating 3G, 4G, WiFi, ADSL, VDSL and Fibre backed up by a nationwide optical transport network that is underpinning anytime, anywhere connectivity for customers,”

Telecom NZ’s purchase remains subject to clearance by the Commerce Commission.

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