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EE eyes up £400m payday at spectrum auction

Everything Everywhere starts ball rolling through gritted teeth

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Everything Everywhere has started consulting on how best to auction off the 30MHz of bandwidth it's required to give up, with a view to turning it into £400m in cash some time next month.

That's according to the Financial Times, who's been talking to the ever-helpful "people familiar with the plan" and heard that the Royal Bank of Scotland is being lined up to handle the auction. That auction will see radio spectrum which was handed out by the UK government, to UK companies, being sold by the now-foreign owners for a tasty £400m or so.

That's an estimated price; no one knows how much the spectrum is worth. Any buyer will be taking a significant punt given the uncertainty around the UK spectrum market which is about to be seriously disrupted by the upcoming mega auction.

When T-Mobile and Orange merged the EU said they would have to sell off 30MHz of their holdings at 1800MHz, which is what's now to be auctioned off. When the mega auction comes, Ofcom will almost certainly cap the total holdings of any one operator, so EE will want to get shot of that 30MHz ahead of that auction.

Equally: no one is going to buy EE's spectrum until the mega auction rules are known, and we're still awaiting the next round of proposals from Ofcom on that score. Those rules will include caps on spectrum ownership, so despite EE's 30MHz being suitable for 2G, 3G or even 4G telephony, it's very hard to put a price on it.

In the UK we launched 2G at 900MHz and 1800MHz, with 3G at 2.1GHz. Relaxed licences now let operators run 3G (or even 4G) at 900 and 1800MHz, and O2 has started filling its 900MHz band with 3G around London, but 3G kit usable at 1800MHz is still relatively rare.

Get into 4G and things gets worse: right now there are more than 40 different bands which are mapped for LTE (the 4G technology of preference) around the world, with only 2.6GHz and 800MHz having any degree of international harmonisation. LTE will happily run at 1800MHz, but what proportion of handsets will end up supporting that band we don't know.

Everything Everywhere has to get shot of the spectrum, but is selling less-than-prime frequencies a scant few months before some of the most valuable spectrum on the dial comes up for public auction. EE will be hoping to drum up some interest, and get a competitive auction going, but seems unlikely to get what the spectrum is worth, assuming one can ever work out what that would be. ®

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