Release of 21.10.2013
Vienna, 21 October 2013: The Telekom Austria Group (VSE: TKA, OTC US: TKAGY) has announced that the Austrian spectrum auction for the new 800 MHz band (six blocks auctioned) as well as the existing 900 MHz (7 blocks auctioned) and 1800 MHz (15 blocks auctioned) bands has been concluded today. No new operator entered the spectrum auctions. Thus, all spectrum (28 blocks) was available to the existing operators. Telekom Austria Group’s domestic subsidiary A1 Telekom Austria acquired four blocks of the 800 MHz spectrum, three blocks of the 900 MHz spectrum and 7 blocks of the 1800 MHz spectrum for a total consideration of EUR 1,030 million. Thus Telekom Austria Group acquired half of a total available spectrum of 2 x 140 MHz.
“Austria’s best network will be even better in the future” said Hannes Ametsreiter, CEO Telekom Austria Group and A1. “We are very happy about the excellent spectrum package we were able to purchase. The high price we had to pay is a bitter pill to swallow, however, A1 is now best equipped for the future, and more specifically, for the on-going explosion of data volumes.”
“In the auction, we have mainly tried to buy spectrum in the low-frequency range (800 and 900 Mhz) to be able to offer our customers the best possible coverage with voice and data services going forward,” added Marcus Grausam, CTO of A1 Telekom Austria. Moreover, in the second round, the company succeeded in acquiring a significant spectrum package in the 1800 Mhz frequency block at a very attractive price. “The bids we made in the auction were clearly in the best interest of our customers, nevertheless, we ended up paying one of the highest prices in Europe, which slightly dampened the joy over this success,” concluded Marcus Grausam.
Bidding strategyIn light of Telekom Austria’s existing spectrum as well as the spectrum held by its competitors (significant positions in the 1800 MHz frequency band) prior to the auction, Telekom Austria Group’s bidding strategy was focused on the 800 MHz spectrum as well as retaining its vital position in the 900 MHz band during the main round (so called “clock round”). The comparatively high number in the 1800 MHz band (seven blocks in total) was a result of the “supplementary round” where Telekom Austria Group acquired 20 MHz of additional spectrum as four blocks of spectrum remained unsold in the “clock round”. This 40% increase in spectrum only led to a 3% increase in total costs.
Spectrum distributionOf the total auctioned 2 x 140 MHz A1 Telekom Austria could acquire 2 x 70 MHz, while T-Mobile Austria bought 2 x 45 MHz and Hutchison 3G Austria 2 x 25 MHz. A1 was able to buy two thirds of the particularly attractive 800 MHz spectrum.
Subsequent to the auction, the new spectrum distribution for the auctioned frequency bands in Austria will be the following:
A1 Telekom Austria
| | 800 MHz | 900 MHz | 1800 MHz |
|---|
| before |
n.a. |
2 x 20,2 MHz
(until 2015/17) |
2 x 15 MHz
(until 2015) |
| after |
2 x 20 MHz
(until 2029) |
2 x 15 MHz
(until 2034) |
2 x 35 MHz
(until 2034) |
Hutchison 3G Austria
| | 800 MHz | 900 MHz | 1800 MHz |
|---|
| before |
n.a. |
2 x 0,8 MHz
(until 2017) |
2 x 29 MHz
(until 2017) |
| after |
0 MHz
(until 2029) |
2 x 5 MHz
(until 2034) |
2 x 20 MHz
(until 2034) |
T-Mobile Austria
| | 800 MHz | 900 MHz | 1800 MHz |
|---|
| before |
n.a. |
2 x 12,8 MHz
(until 2015) |
2 x 25,4 MHz
(until 2015/19) |
| after |
2 x 10 MHz
(until 2029) |
2 x 15 MHz
(until 2034) |
2 x 20 MHz
(until 2034) |
The maturity date for the 800 MHz spectrum band, which is available immediately, is 31 December 2029. The start of the licensing period for all auctioned blocks in the 900 MHz and the 1800 MHz band depends on the existing frequency licences, while the new licences will now have a common maturity date of 31 December 2034 for all operators.
Strong strategic positionThis new spectrum offers Telekom Austria unique strategic advantages. Having acquired 67% of the immediately available low frequency 800 MHz spectrum, Telekom Austria Group is in an unparalleled position to roll out a leading LTE network across Austria. This fully supports Telekom Austria Group’s high value strategy and network quality leadership and allows Telekom Austria Group to protect its fixed-line as well as its mobile customer base, in particular in rural areas. Moreover, the spectrum distribution has significantly reduced the viability of a potential new mass market mobile virtual network operator (MVNO).
Financial implications and fundingThe purchase price of the spectrum will be payable in full within approximately 8 weeks. The Telekom Austria Group will finance the spectrum acquisition via existing cash as well as additional debt. In light of the resulting impact on its balance sheet the Telekom Austria Group intends to achieve deleveraging via operational cash flow generation to support the Group’s BBB (stable) target rating.
Broadband investmentsOn 22 March 2013, the Federal Ministry for Transport, Innovation and Technology announced that EUR 250 million of the proceeds from the Austrian spectrum auctions will be dedicated to broadband investments & research and development grants.
Detailed information:
TKA acquires Austrian Spectrum (Presentation) (100.8 KB)