The auction released spectrum across four key bands – 700 MHz, 2300 MHz, 2600 MHz and 3500 MHz – and generated USD 187.5 million, broadly in line with benchmark-based expectations. While the overall results aligned with government revenue goals and saw spectrum assigned to the major operators (Vodacom, Airtel, MIC and Viettel), our review finds that the auction’s success owed more to favourable circumstances than to the structure of the award process.

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Positive features of the award

TCRA made several effective decisions that supported strong operator participation and reasonable valuation outcomes:

  • Timely release of spectrum, particularly in 3.5 GHz, enabling 5G deployment planning.

  • Reserve prices generally set at sensible discounts to estimated market values (with 3.5 GHz an exception, priced closer to full value).

  • Coverage obligations that were moderate and technology-neutral, limiting their impact on spectrum valuations while still promoting service expansion into rural areas.

  • A 15-year licence term with renewal opportunities, supporting long-term investment incentives.

These design elements provided clarity and stability for operators despite other structural weaknesses in the auction format.

Major weaknesses in the auction design

The award was conducted as a series of sequential, first-price, sealed-bid auctions — a structure that created several well-understood risks in spectrum allocation, including:

  • Exposure risk: bidders seeking complementary blocks (e.g., multiple 3500 MHz lots) faced the possibility of winning only part of their desired package but paying a price reflecting combined valuation.

  • Substitution risk: sequential auctions prevented bidders from knowing the outcome or pricing of substitute bands before submitting bids, increasing the likelihood of mis-bidding.

  • Inefficiency risk: first-price sealed bidding incentivises shading below valuation, raising the probability that spectrum is not awarded to the operator with the highest true value — compromising economic efficiency.

  • Equity issues: bidders ultimately paid dramatically different prices for similar spectrum, with per-block prices in the same band differing by 30–60%, outcomes that are difficult to justify publicly and that increase the likelihood of bidder regret.

These weaknesses contrast sharply with simultaneous multi-round ascending (SMRA) auctions, widely adopted by regulators to minimise exposure and substitution risks, support price discovery, and improve transparency.

Outcome

Despite the risks inherent in the chosen design, all spectrum was sold and allocations broadly aligned with operators’ spectrum needs and coverage strategies. However, the structure of the auction compromised efficiency and introduced unnecessary uncertainty, making the positive outcome more a reflection of bidder behaviour and market conditions than of good auction design.

Key lessons for regulators

The Tanzania auction illustrates several important principles for future awards:

  • Allow sufficient preparation time — the six-week window offered to bidders was not adequate for valuation, strategy development and internal approvals.

  • Use auction formats that minimise strategic risk, such as SMRA or other simultaneous multi-round models.

  • Ensure reserve prices balance revenue goals and efficiency, avoiding overpricing that risks auction failure.

  • Avoid first-price sealed bids for multi-band awards due to their well-documented inefficiencies and equity problems.

How Coleago supports spectrum regulators

Coleago brings more than 20 years of experience advising regulators and mobile operators on spectrum management, pricing, auction design and award implementation. By grounding regulatory recommendations in an operator-realistic perspective and economic best practice, Coleago helps regulators meet policy goals while ensuring efficient and competitive spectrum assignments.

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