Monday, 09 May 2016 16:42

Telstra up in arms about Vodafone ‘below market rate’ spectrum buy offer Featured


Vodafone’s offer to buy spectrum in the 700MHz band from the government for $594.3 million dollars has sparked an angry reaction from competitor Telstra, with the big telco labelling the offer price as being below market rate.

Telstra complains that Vodafone had its chance to buy spectrum in the 700MHz band during the government spectrum auction in 2013 -- and is now paying below market rate for it.

Expressing what it says is its concern at the “process and potential outcome”, Telstra complained that “there was a competitive auction in 2013 for this spectrum, which Vodafone chose not participate in”.

“Despite being one of the world’s largest telecommunication companies, it is now trying to buy spectrum at a price we believe is below the market rate and outside a transparent competitive process."

And, according to Telstra, demand for mobile capacity continues to grow and it queries “how taxpayers can be sure this provides a higher return than a competitive process.”

In the 2013 auction, in the absence of a bid from Vodafone, Telstra paid significantly more than Vodafone is offering - $1,302,019,234 to be exact - to secure 2x20 MHz in the 700 MHz band and 2x40 MHz in the 2.5 GHz band.  Optus paid $649,134,167 for its slice of spectrum - 2x10 MHz in the 700 MHz band and 2x20 MHz in the 2.5 GHz band – while TPG Internet secured 2x10 MHz in the 2.5 GHz band for $13,500,000.

Telstra’s concerns raised in its statement followed Monday’s announcement of the Vodafone offer by the Department of Communications.

The department says the offer to buy spectrum by Vodafone was an “unsolicited proposal” for a licence term of 11 years and 9 months, and Vodafone would pay the total of $594.3 million in three instalments over three years.

The Federal Government’s announcement in May last year that it had directed the competition watchdog, ACMA, to set competition limits on the amount of spectrum that can be bought by any one operator was done against Telstra’s recommendation that no limits be set.

At the time, Telstra’s position was opposed by both Vodafone and Optus, with the two carriers saying they wanted to prevent Telstra from further increasing its advantage in regional areas “to the detriment of end users”.

But, in today’s announcement of Vodafone’s offer for spectrum – which has angered Telstra - the Department of Communications says the terms of VHA’s proposal are “consistent with the Government’s spectrum policy objectives, which include maximising the overall public benefit derived from the spectrum by ensuring its efficient allocation and use”.

It also says that, in addition, “VHA’s proposal replicates, as far as possible, the rules of the digital dividend auction to ensure that VHA is not advantaged by not participating in that auction process in 2013”.

According to the Government, as at 30 June 2013, Telstra had approximately 58% of the mobile broadband marketshare, Optus had 17%, Vodafone (VHA) had 10% and others, including iiNet, iPrimus and TPG, had 16%.

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Peter Dinham

Peter Dinham - an iTWire treasure is a mentor and coach who volunteers also a writer and much valued founding partner of iTWire. He is a veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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