Spectrum – an Asset or a Liability?
Is mobile spectrum still an asset, or has it become a liability? This paper explores why spectrum acquisition is increasingly defensive and how operators can protect value by optimising what they already hold.
Spectrum is traditionally viewed as a strategic asset, yet evidence from developed mobile markets suggests that acquiring new spectrum often destroys shareholder value rather than creating it. Despite decades of heavy investment in spectrum auctions and network deployment, many mobile operators have consistently delivered returns below their cost of capital, with limited revenue growth and declining shareholder value.
This paper argues that spectrum acquisition has increasingly become a defensive necessity rather than a source of competitive advantage. In highly competitive markets where operators offer similar services using comparable infrastructure, any performance advantage delivered by new spectrum is quickly competed away, with the benefits accruing primarily to customers rather than shareholders. As a result, operators may be worse off after acquiring spectrum than they would have been if no auction had taken place.
The analysis explains why, despite this value destruction, it can still be rational for operators to participate in spectrum awards: failing to acquire spectrum when competitors do so can result in even greater loss of value through higher network costs or degraded service quality. Against this backdrop, the paper concludes that operators should focus on maximising the value of existing spectrum holdings through optimisation, replanning, swaps, and strategic reviews, reducing the need for further value-destructive spectrum acquisitions.
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