Economy Swisscom, Sunrise, Salt pay $380 million for Swiss 5G frequencies

Swisscom, Sunrise, Salt pay $380 million for Swiss 5G frequencies

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Swisscom, Sunrise, Salt pay $380 million for Swiss 5G frequencies

The Swiss government raised 380 million Swiss francs (£292.9 million) from auctioning fifth-generation mobile frequencies, it said on Friday, one of the first sales for the rollout of the technology in Europe.

Market incumbents Swisscom, Sunrise Communications and privately owned Salt each received part of the spectrum. Newcomer London-based Dense Air, which is part of the Airspan Group and hosts 4G and 5G mobile phone networks in Europe, Australia and New Zealand, dropped out of the bidding.

Telecoms operators are keen to access 5G frequencies to gain an edge in new digital services such as powering the Internet of Things – everyday objects which can communicate with each other via the internet – industrial automation and autonomous vehicles.

The bidding, which covered blocks of frequencies within the 700 MHz, 1400 MHz, 2.6 GHz and 3.5 GHz ranges, had been expected to raise at least 220 million Swiss francs with the proceeds going to the Swiss treasury as extraordinary revenue.

Swisscom offered 195.5 million francs; Salt 94.5 million francs and Sunrise 89.2 million francs for parts of the frequencies, which will be assigned for 15 years.

“It was positive for the companies involved that the prices they paid were pretty low – less than half of the previous auction in 2012 for 4G,” said Andreas Mueller, an analyst at Zuercher Kantonalbank.

Salt said it was “extremely satisfied” with the outcome of the auction.

Its acquisition will allow it to provide deeper indoor high-speed coverage and speed up mobile broadband access.

State-controlled Swisscom said it bought 46 percent of the frequencies sold and considered the price to be a long-term investment in the future of the mobile market.

It said its 196 million franc bid was not included in 2019’s projected capital investments of around 2.3 billion francs.

Both Swisscom and Sunrise said their bids would have no impact on dividend policy, a key consideration for investors in telecoms companies.

Both companies’ shares were indicated marginally softer in pre-market activity.

“It was good news for all the companies that no fourth player entered the market because this means less price pressure on them,” Mueller said

Italy raised 6.5 billion euros ($7.4 billion) last year for state coffers through a 5G auction that drew ferocious bidding but was criticised for draining capital reserves from operators that face hefty network investments.

Germany could raise 4 billion-5 billion euros from its planned auction of spectrum for 5G mobile services, business daily Handelsblatt has reported.

Deutsche Telekom, Vodafone, Telefonica Deutschland and 1&1 Drillisch, a unit of United Internet, are expected to bid in the second-half of March.