The recent spectrum auction in Norway left one of its three incumbent operators, Tele2, without spectrum, while a ‘mystery buyer’ called Telco Data snapped up assets in the 800MHz, 900MHz and 1.8GHz bands.
That buyer has turned out to be a new vehicle for Access Industries, a holding company founded by Ukrainian-American billionaire Leonard Blavatnik, which already owns Norwegian mobile provider Ice.net as well as Net1 in Sweden and Denmark. Ice.net has about 104,000 subscribers, compared to 3.3m at market leader Telenor and 1.7m at TeliaSonera.
In other words, Access may be putting together a set of assets which could create a pan-regional player in Scandinavia, to rival TeliaSonera and Telenor ‘ and at a time when Nordic operators have been calling for consolidation in the competitive but fragmented area (see separate item). However, it may well target different sectors, including the high growth M2M area, assuming it plows the new spectrum into Ice.net ‘ that company does not compete head-to-head with the majors, but focuses on M2M and portable fixed wireless broadband for rural areas, rather than handsets.
It may also hope for a deal with Tele2, which missed out on any spectrum in the auction and said it would ‘now further evaluate the situation after the auction and take the appropriate actions to strengthen its position in the country’. Telco Data, newly established for the purpose of the auction, won 2 x 10 MHz in the 800MHz band, 2 x 5MHz in 900MHz band and 2 x 20MHz in 1.8GHz.
Some analysts, such as Graham Friend, managing director of Coleago Consulting, believe the auction process was to blame for Tele2 being excluded. The regulator, NPT, chose a first price sealed bid auction, in which, Friend explained, ‘bidders effectively write a number down in an envelope and the highest bidders win and pay the amount they each bid. In such an auction it makes sense to bid less than the value you place on the spectrum or, as game theorists like to say ‘shade your bid’. The challenge, however, is to determine how much to shade your bid … Tele2 may have decided to shade very aggressively in the hope of securing spectrum at a low price and thus create significant value. The combination of very aggressive shading from Tele2 however and a supercharged new entrant business case is likely to have generated the upset.’
The three main operators already have LTE spectrum in 2.6GHz and Norway was one of the first countries to get commercial 4G services, initially from TeliaSonera.
Telenor and NetCom (Telia’s brand in Norway) will get 2’10MHz in the 800MHz, 2’5MHz in the 900MHz band and 2’10MHz in the 1.8GHz band. All available spectrum in the sub-1GHz bands has now been allocated, but 2x5MHz blocks in 1.8GHz went unsold.
The 800MHz licences come with coverage obligations, and all three operators will have to provide mobile broadband services with average access speeds of at least 2Mbps to 40% of the population within four years of the award of licences. NetCom, having won the ‘A2’ block in the 800MHz band, has the additional obligation to cover 98% of the population with 2Mbps services within five years, and with these services being primarily supported by 800MHz.