Yahoo Finance BT shares surge as mobile operators dodge big 5G bill
Mobile operators have avoided a burdensome bill for 5G airwaves in an auction that cost far less than expected, sending BT shares soaring.
EE, the UK’s biggest mobile operator that is owned by BT, spent £452m on additional 5G spectrum that allows faster smartphone data – far less than the £824m analysts had forecast.
All four mobile operators that took part in the auction, including Vodafone, O2 and Three, spent less than had been expected. The £1.3bn raised for the Treasury was about half the total pencilled in by analyst predictions of around £2.5bn.
The amount marks a stark contrast to the 3G auction in 2000 when a colossal £22.5bn was raised by five operators when the mobile industry was growing.
The outcome sent BT shares up almost 7pc to almost 153p – the highest level in more than 12 months – boosting boss Philip Jansen ahead of the telecoms giant’s £12bn nationwide “full-fibre” broadband upgrade.
Wrapping up the spectrum auction in less than a week will come as a relief to mobile operators after 5G bidding in parts of Europe became drawn out affairs with spiralling costs.
Germany’s 5G spectrum auction two years ago descended into a three-month tussle costing operators £5.6bn.
However, it will come as a blow for the government coffers as the auction attracted around half the investment it might have expected.
Karen Egan of Enders Analysis said: “The cash-strapped operators have little appetite for driving up their spectrum bills particularly given the significant costs to them of the Huawei ban and ongoing revenue declines in the sector in spite of booming volume growth.”
EE said its investment in 3.6GHz spectrum will give it “greater capacity and speed, while its spend on low band 700MHz would be “crucial for reach and indoor coverage”.
Three UK, which had the biggest share of 5G spectrum ahead of the auction, tripled its low frequency holding by spending £280m.
O2-owner Telefonica outlayed £448m to increase its spectrum holding by a third, while Vodafone spent £176m to buy 40Mhz of spectrum in the 3.6 to 3.8GHz band.
Vodafone shares rose 2pc 137p after spending 74pc less than analysts expected.
Berenberg analyst Carl Murdock-Smith said: “It seems that competitive tension was eased by Vodafone being comfortable with its already strong holdings in 1GHz spectrum, and Three being comfortable with its already strong holdings in 3.6-3.8GHz.”
The auction will now move to the so-called “assignment stage” where the operators can bid for their preferred frequency positions for the airwaves.
Philip Marnick, head of spectrum at Ofcom, which ran the auction, said the process was “an important step forward in bringing better mobile services to people – wherever they live, work and travel.”
“These airwaves will help improve coverage for the mobile services people use today, as well as supporting the UK’s position as a world leader in 5G,” he added.
The auction comes as operators move to shore up the nation’s mobile network despite shouldering the estimated £2bn cost of stripping out Huawei equipment over Chinese spying fears.
The four operators have teamed up to tackle bad mobile phone signals in the countryside by using each other's towers through a Shared Rural Network.
EE’s upgrades will target 579 areas by the end of this year, while Vodafone, O2 and Three plans to build 222 new mobile masts as part of the SRN.
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