The operators paid €4 billion more than the Italian government’s reserve prices in a 14-day auction that saw 171 bidding rounds.
The four spent two thirds of the sum, €4.3 billion, on 3,700MHz spectrum, one of the favourite bands for 5G services because it also supports multiple-input-multiple-output (MIMO), a way of increasing bandwidth.
Fitch Solutions, an associate of the ratings company, said: “Our view is that operators, especially TIM and Vodafone, overpaid for the band as a defensive measure against new entrant Iliad, whose focus has been on competing on the mobile data front.”
Iliad came into the Italian market as a condition for Wind – formerly owned by Veon – and CK Hutchison’s Tre Italian being allowed to merge. Veon has since sold its stake to Hutchison.
Fitch Solutions questioned the results of the auction. “As the band is already available, the talk has been about launching 5G, but we do not believe it is sustainable in the Italian market, which has one of the lowest 4G penetration rates in Europe. As it stands, the main beneficiary of the auction is the Italian Treasury.”
The new group CEO of Vodafone, Nick Read, who took over from Vittorio Colao this week, grumbled: “Auctions should be designed to balance fiscal requirements with the need for investment to enable economic development. Telecoms is the sector that enables all other sectors to participate in the gigabit society. It is critical that European governments avoid artificial auction constructs which fail to strike a healthy balance for the industry.”
TIM’s CEO, Amos Genish, did not comment on the price, but said: “By securing all three band frequencies put on auction, TIM strengthens its network leadership in Italy. The new frequencies acquired represent a core asset for the group’s future development and, at the same time, for the ongoing digitisation of Italy.”
TIM spent €1.69 billion in the latest auction, but won 700MHz spectrum in an earlier auction, putting its total spend at €2.4 billion. Its successful bids included a 80MHz block at 3,700MHz at a cost of €1.69 billion and a 200MHz block at 26GHz for €33 million.
Genish said: “Artificial intelligence, virtual and augmented reality, robotics and a network of sensors expected to number one trillion by 2025 – these will be the innovation drivers of the next decade and the pillars on which digital transformation is based.”
Vodafone paid a similar sum to TIM for an equivalent 80MHz in the 3,700MHz band. Its total payment of €2.4 billion will also bring it spectrum at 700MHz and 26GHz.
Iliad’s total payments were €1.19 billion for spectrum in all three bands on offer.
Wind Tre spent €517 million for 20MHz in the 3,700MHz band and 200MHz in the 26GHz band. CEO Jeffrey Hedberg said: “We are fully committed to the 5G future and have the resources, funding and a low cost base, to continue to innovate and to deliver high quality broadband services at attractive prices to our customers across Italy.”
