Regulator confirms payments for 2100MHz licences, valid from Oct-16

11 Mar 2015

Hong Kong’s Communications Authority yesterday (10 March 2015) officially confirmed the award of 2100MHz mobile licences to the previously announced provisional winners of December’s open auction, namely China Mobile Hong Kong, Hutchison Telephone Company (3) and SmarTone Mobile Communications. Final prices for each licence remained unchanged from the original announcement in December, while the regulator confirmed that having obtained bank guarantees for Spectrum Utilisation Fees (SUF) totalling HKD2.421 billion (USD312 million) payable by 22 August 2016, the Authority shall grant the licences with validity from 22 October 2016.

As background, TeleGeography’s GlobalComms Database says that under approval conditions for the merger of Hong Kong Telecommunications (HKT, part of PCCW) with CSL New World Mobility, the merged company must divest an existing contiguous 2×15MHz spectrum block upon its licence expiry in October 2016, leaving the market-leading operator with 2×15MHz in the 2100MHz band while being excluded from bidding on additional re-auctioned spectrum in that range. All incumbents in the band – HKT (including CSL), 3 and SmarTone – accepted rights of first refusal in August 2014 for reassignment of 2×35MHz of the 2100MHz spectrum, while the open auction for the remaining 2×25MHz was held on 8 December 2014 with three participants, SmarTone, 3 and China Mobile Hong Kong. 3 won 2×5MHz at auction, costing USD60.9 million (meaning it will retain 2×15MHz in the band from October 2016). SmarTone raised its holding in the band by acquiring 2×10MHz at auction for USD126.5 million (to give it a total of 2×20MHz). China Mobile Hong Kong acquired 2×10MHz in the auction for USD125.2 million, enabling it to enter the 2100MHz network operating segment from October 2016 onwards. GlobalComms adds that China Mobile Hong Kong had existing arrangements enabling 3G capacity resale via third-party infrastructure, and as an additional condition of the May 2014 PCCW (HKT)-CSL takeover approval, the merged company must continue HKT’s former 3G network capacity sharing agreement with China Mobile Hong Kong.