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Demand moderation in German spectrum auction

As predicted by Coleago, the three bidders Telefónica, Deutsche Telekom, and Vodafone from the outset of this SMRA auction limited their bids in the 700MHz band to two blocks each, so that after 34 rounds at the end of day 3 the standing highest bids are still at the reserve price. Bids for the 900MHz blocks have also not increased since round 29. There is still activity on the 1800MHz blocks with the three bidders compete for 10 blocks. In round 34, Vodafone was the standing highest bidder on 5 of the 10 blocks. The 1800MHz band is important because in accommodates GSM and LTE traffic. The 1500MHz is only contested between Deutsche Telekom and Vodafone and prices are ticking up slowly. The auction is likely to end next week with auction receipts in the €2 to €2.5 billion range. This would be low compared to recent prices paid and is consistent with the German policy objective of not maximising auction receipts. The key policy objectives are to a) deliver wide area mobile broadband coverage, b) provide incumbent operators with planning certainty and c) maintain network based competition. 

Stefan Zehle, CEO, Coleago Consulting

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