Incumbent cellcos win 2.5GHz/2.6GHz spectrum

20 Mar 2013

Hong Kong’s Office of the Communications Authority (OFCA) yesterday announced that the territory’s five existing mobile network operators successfully bid for a total of 50MHz of mobile spectrum in the 2.5GHz/2.6GHz band, paying combined fees of HKD1.54 billion (USD198 million) for their 15 year licences. The new spectrum augments existing multi-band resources – including 2.5GHz/2.6GHz frequencies already used for LTE – held by all five operators, and will provide the necessary network capacities to further develop 4G services in Hong Kong, OFCA declared. The open auction commenced on 18 March 2013 and was concluded after 18 bidding rounds.

Genius Brand (the 4G network sharing joint venture of Hutchison 3 and PCCW) won frequency band A1 (2515MHz-2520MHz paired with 2635MHz-2640MHz) for spectrum utilisation fees (SUF) of HKD290 million.

SmarTone won band A2 (2520MHz-2525MHz paired with 2640MHz-2645MHz) for SUF of HKD330 million, plus band A3 (2525MHz-2530MHz paired with 2645MHz-2650MHz) for SUF of HKD310 million – a total SUF of HKD640 million.

China Mobile Hong Kong won band A4 (2530MHz-2535MHz paired with 2650MHz- 2655MHz) for SUF of HKD300 million.

CSL won band A5 (2535MHz-2540MHz paired with 2655MHz-2660MHz) for SUF of HKD310 million.

OFCA noted that the average SUF in the auction, HKD30.8 million per MHz, is about 80% higher than that obtained in the auction of the same frequency band held in January 2009, reflecting the increasing value of radio spectrum.

GlobalComms notes that SmarTone bought the most 2.5GHz/2.6GHz spectrum this week as it was previously the only one of the five cellcos not to hold frequencies in the band, having launched its LTE network last October exclusively in the 1800MHz band, whereas rivals CSL, 3 and PCCW all offer dual-band 2600MHz/1800MHz LTE services, while China Mobile Hong Kong operates a 2600MHz/2300MHz FDD/TDD LTE network.

There was one other, unsuccessful bidder in the auction this week, namely China Unicom (Hong Kong), which GlobalComms shows has provided mobile virtual network operator (MVNO) in the territory since April 2002 and was issued an IP telephony licence in December 2012, while its Chinese parent is a shareholder in PCCW. China Unicom previously said it regarded its Hong Kong MVNO as an aid to its international roaming services and did not aim to garner direct market share in the Special Administrative Region (SAR), but its recent licensing moves, both successful and unsuccessful, suggest a change in expansion strategy.