German 5G Auction Ends With Companies Pledging EUR6.5 Billion for Spectrum

By Patrick Costello

--Germany's 5G spectrum auction ended late Wednesday with telecom companies pledging over EUR6.5 billion for frequencies

--Deutsche Telekom spent more than its peers for spectrum

--The auction costs exceeded companies' and analysts' initial expectations

Germany's 5G spectrum auction ended late Wednesday with the country's main telecoms operators pledging to pay over 6.5 billion euros ($7.36 billion) for frequencies on the 5G mobile spectrum.

Deutsche Telekom AG (DTE.XE), Telefonica Deutschland AG (O2D.XE), Vodafone Germany and 1&1 Drillisch AG (DRI.XE) pledged a total of EUR6.55 billion in 497 rounds of bidding for licenses to 41 blocks of spectrum, said the Federal Network Agency, Germany's telecoms regulator and the auction organizer.

The auction kicked off on March 19 and lasted nearly three months, ending last night only when operators ceased submitting new bids. Companies bid for frequencies to build up 5G networks that will be used by consumers and industry.

Deutsche Telekom outspent its rivals, securing 13 blocks of frequencies for EUR2.17 billion. Vodafone Germany spent EUR1.88 billion on 12 frequency blocks, while Telefonica Deutschland spent EUR1.42 billion on nine frequency blocks.

1&1 Drillisch pledged EUR1.07 billion for seven frequency blocks. The company is aiming to become Germany's fourth mobile network operator having now won spectrum.

Still, companies criticized that the final costs for 5G spectrum were too high, saying this deprives them of funds to build up their next-generation mobile networks.

"Once again, the spectrum in Germany is much more expensive than in other countries," Deutsche Telekom board member Dirk Woessner said. "Network operators now lack the money to expand their networks."

Analysts likewise said the auction costs exceeded initial expectations and came in too high.

"The high cost at which the German 5G spectrum auction settled is a setback for the industry," Jefferies said, calling the auction an "unexpectedly drawn-out process."

Deutsche Bank's Nizla Naizer said the final price tag came in EUR1.5 billion ahead of the bank's initial estimate of EUR5 billion, adding that "all eyes" would now turn to 1&1's plans for rolling out its new network.

Write to Patrick Costello at [e-mail].

(END) Dow Jones Newswires

June 13, 2019 06:59 ET (10:59 GMT)

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