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UPDATE 1-German telecoms regulator to auction frequencies from 2014
June 24, 2013 / 4:41 PM / 4 years ago

UPDATE 1-German telecoms regulator to auction frequencies from 2014

* Proposes auction process to start in 2014

* Early auction could put pressure on balance sheets

* Telecom operators had asked for delayed auction

By Harro Ten Wolde

FRANKFURT, June 24 (Reuters) - Germany’s telecoms regulator wants an early auction of mobile frequencies to make sure demand for growing wireless services is being met, despite opposition from cash-strapped operators in Europe’s biggest mobile market.

In a document published on its website on Monday, the regulator said it was planning to start the auction process for the 900 MHz and 1,800 MHz frequencies, currently licensed to handle voice calls, from 2014.

That is almost three years before the current licences expire, at the end of 2016.

Deutsche Telekom, Vodafone Germany, KPN and Telefonica Deutschland had asked the regulator for an extension of their 900 MHz and 1,800 MHz licences until 2018 or later.

All argued a potentially expensive auction should be delayed because they needed financial firepower for investments in the roll-out of super-fast mobile networks, known as 4G or LTE.

Last year an auction of 4G wireless frequencies yielded 3.8 billion euros in the Netherlands, with prices so high that market leader KPN said it would have to cut its dividend.

The German regulator said on Monday it would also add 700 MHz spectrum to the auction, currently in use by radio and television broadcasters as well as spectrum in the 1.5 GHz band.

The auction could put pressure on the balance sheets of the operators, especially KPN and Telefonica Deutschland, the two smaller players.

“An early auction would mean a cash drain for the operators, who are in the middle of some heavy investments in the rollout of a LTE network,” said a fund manager who holds shares in all four operators.

The manager, who declined to be identified, said an auction could also lead to new talks about network sharing between operators in the German market because KPN and Telefonica may realise they need to team up to keep up with the market leaders.

KPN and Telefonica held talks about a merger of their German activities in 2012 and have also discussed network sharing to reduce costs. But Markus Haas, Telefonica Deutschland’s chief strategy officer, said no talks were currently being held.

Operators have until October to submit their opinion about the regulator’s plans. A final decision will be made early next year.

Deutsche Telekom shares closed down 1.9 percent, while Telefonica Deutschland lost 1.5 percent, slightly underperforming a 1.3 percent lower telecom index. KPN shares lost 3.4 percent in Amsterdam. Shares in Vodafone, which has agreed to buy Germany’s largest cable operator Kabel Deutschland, rose 0.3 percent in London.

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