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Decision on O2/Three merger delays UK mobile spectrum auction

Thursday, December 3rd 2015 by Ellen Branagh

Ofcom is delaying its latest mobile spectrum auction until the European Commission makes a decision on the planned O2/Three merger.

The UK’s telecoms watchdog is auctioning off spectrum in the 2.3 and 3.4Ghz bands – used mainly for mobile broadband – with reserve prices totalling £70m.

In October Ofcom said the auction for the spectrum, which was made available by the Ministry of Defence (MoD) as part of a programme to free up spectrum for public use, was planned to take place in December.

The regulator said there would be no cap on the amounts that bidders could buy, and large blocks of spectrum could help give consumers faster mobile broadband and pave the way for the arrival of 5G.

But in an update today, Ofcom said it will delay the start of the process.

The move comes amid huge potential change to the UK’s mobile landscape, with mergers of BT and EE, and O2 and Three underway.

Ofcom said that since its statement was published in October, the Competition and Markets Authority (CMA) has published provisional findings on the proposed merger between BT Group plc and EE Limited.

The CMA has given the provisional green light to the merger, with its final report expected in January 2016.

The European Commission is also carrying out an in-depth probe into the planned O2/Three merger, with a decision expected no later than mid-May 2016.

Combined, Three and O2 would create the UK’s largest mobile network, with 41% of the market share compared to EE’s 32% and Vodafone’s 24%.

'Delay'

Ofcom said in November it had received letters from Telefónica UK and Hutchison 3G UK – parent companies of the two operators – announcing plans to bring judicial review proceedings against Ofcom’s decision to start the auction process before the European Commission’s decision on the merger.

A statement from the watchdog said: “After careful consideration, given these specific circumstances, we have decided for reasons of good public administration to delay commencing the auction process.

“Therefore, Ofcom will not now commence the auction process until the European Commission has taken its decision as to whether the proposed merger between Telefónica UK Limited and Hutchison 3G UK Limited is compatible with the common market.”

Earlier this year, Ofcom announced increases to its licence fees – the amount operators have to pay to use parts of the mobile spectrum.

After a lengthy consultation, the regulator said in September that operators should pay an annual total of £199.6m per year – up from the current £64.4m.

At the time, EE branded the move “bad news” for consumers.

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