The Dutch government did not follow many of its European neighbors in postponing 5G spectrum auctions, and has announced the results of a sale that was criticized by operators for relatively high reserve prices. The existing three operators – KPN, T-Mobile NL and Vodafone Ziggo – were the only bidders, and they spent €1.23bn ($1.42bn) between them. The cost equates to over one-third of KPN’s capex and two-thirds of its net profit last year.
Unlike most European operators, the Dutch trio have not gained spectrum in the 3.5 GHz band. Although the main spectrum for initial 5G roll-out elsewhere in the region, providing high capacity without the challenges of millimeter wave bands, 3.5 GHz is used by intelligence agencies in Holland and will not be auctioned to operators until 2022.
In the meantime, the auction offered spectrum in 700 MHz, Europe’s main sub-GHz 5G band, as well as 1.4 GHz; and the 2.1 GHz spectrum, originally allocated for 3G, was relicensed. Vodafone is likely to repurpose its 2.1 GHz assets for 5G, since it plans to sunset its 5G network by the end of this year, but KPN will wait until 2022, and T-Mobile even longer.
The 1.4 GHz band is not a commonly used one, and so may be challenging in terms of equipment and device availability, especially as KPN and Vodafone won only 15 MHz each, and T-Mobile just 10 MHz.
In terms of prices per MHz/POP, The Netherlands is now in second place for 5G auctions so far, behind Italy and ahead of the next-most expensive countries, Germany, South Korea and the UK. The Dutch operators paid about $0.37 per MHz/POP, nine times the amount that Finnish MNOs spent on 3.5GHz spectrum in late 2018.
The Dutch MNOs also face the risk of a Europe-wide ban on Huawei 5G equipment. T-Mobile has Huawei as its sole RAN supplier at present, while Vodafone Ziggo has bought about half its network from the Chinese vendor. KPN recently decided to switch from Ericsson to Huawei for 5G, and about 80% of Dutch mobile infrastructure is now estimated to come from Huawei.
The detailed results of the auction are as follows:
KPN acquired 20 MHz in the 700 MHz band, 15 MHz in the 1.4 GHz band, and 40 MHz in the 2.1 GHz band. This broad range of spectrum cost them €416m and will support a 5G launch this year.
Vodafone Ziggo acquired a similar spectrum range, picking up 20 MHz in the 700 MHz band, 15 MHz in the 1.4 GHz band, and 40 MHz in the 2.1 GHz band, for a total of €416m. It said this new spectrum would allow it to reach near-national coverage by the end of July, having already launched 5G services back in April.
T-Mobile gained 20 MHz in the 700 MHz band, 10 MHz in the 1.4 GHz band, and 40 MHz in the 2.1 GHz band. It spent €398m. TMO still holds an overall lead in spectrum, partly as a result of acquiring Tele2 in 2015.