4G spectrum auction proceeds could fall short of target

Proceeds from the forthcoming 4G spectrum auction could fall well short of estimates, according to industry sources.

Shadow Chancellor Ed Balls yesterday (October 1st 2012) used his speech at the Labour Party conference to call for money generated by the sale of super-fast mobile broadband spectrum to be spent on the construction of 100,000 homes.

Mr Balls predicted the auction will generate a windfall of up to £4 billion, but telecoms industry experts told the Telegraph that the actual amount could fall well short of this. In fact, the Shadow Chancellor's homebuilding plan could be left with less than £20,000 per house, they warned.

Ofcom has set the reserve price at £1.5 billion, while some spectrum was left unsold in a similar auction held in Romania recently. The French and German equivalents raised €936 million (£746 million) and €4.4 billion respectively.

Hopes for the 4G sell-off had been high thanks to the success of the 3G spectrum auction of 2000, which generated almost £22.5 billion.

However, principal analyst in Ovum's telecoms strategy practice Steven Hartley stressed that this huge sum was an anomaly.

"The amount of value that had to be written down was astronomical," he explained. "From a business sense perspective, such an auction isn't going to happen again."