Hong Kong’s Office of the Communications Authority (OFCA) yesterday concluded the reassignment via auction of 49.2MHz of paired mobile spectrum in the 2100MHz band to three existing network operators: China Mobile Hong Kong (receiving frequencies in the band for the first time), SmarTone and Hutchison Telephone Company (3), raising total spectrum utilisation fees (SUF) of HKD2.42 billion (USD312 million). Successful bidders are required to submit a letter of credit by March 2015 to guarantee payment of the SUF, with licences valid for 15 years starting from 22 October 2016.
By way of background, 118.4MHz of paired spectrum blocks in the 2100MHz (‘1.9GHz–2.2GHz’) band were assigned under 3G (UMTS) licences in 2001 to HKT (PCCW) and CSL (later merged), 3 and SmarTone, which will expire in October 2016. Following OFCA’s decision in November 2013 on reassignment and the conditions imposed on the HKT/CSL merger in April 2014, the incumbents in the band accepted the right of first refusal in August 2014 for reassignment of 69.2MHz of the 2100MHz spectrum, while the remaining 49.2MHz was made available via auction (which excluded HKT/CSL).
3 acquired 9.8MHz (2×4.9MHz) in the auction, costing the equivalent of USD60.9 million, and together with the 19.8MHz over which it has exercised its right of first refusal, 3 will hold 29.6MHz in the 2100MHz band from October 2016 – i.e. it will be reassigned its existing holding in the band.
SmarTone acquired 19.8MHz in the auction for USD126.5 million, and together with the 19.8MHz of spectrum over which it has exercised its right of first refusal, SmarTone will hold 39.6MHz in the 2100MHz band from October 2016 – i.e. it will be assigned 10MHz in excess of its existing spectrum holding in the band.
China Mobile HK acquired 19.6MHz in the auction for USD125.2 million.
HKT (including CSL) will operate with 29.6MHz in the 2100MHz band from October 2016 – i.e. half of the merged operator’s existing bandwidth in that range, after 29.6MHz is redistributed to China Mobile HK and SmarTone as per the results of the auction.