Insights from the Afghanistan Multi-Band Spectrum Auction
What appears to be a simple spectrum auction can be anything but. Coleago analyses Afghanistan’s 2024 multi-band spectrum auction, examining pricing outcomes, auction design choices and key lessons for regulators.
The Afghanistan Telecom Regulatory Authority’s (ATRA) multi-band spectrum auction, which concluded in April 2024, covered spectrum in the 1800 MHz, 2100 MHz and 2600 MHz bands, with all available spectrum successfully assigned.
The auction raised substantial revenues, with prices that appear high relative to international benchmarks, particularly after adjusting for economic conditions and auction competitiveness. Coleago’s benchmarking analysis shows that prices in the 1800 MHz and 2600 MHz bands were achieved at premiums of around 15–25% above reserve, while the 2100 MHz band cleared at almost three times its reserve price. Research consistently links such high spectrum prices to reduced network investment, weaker service quality and higher consumer prices, raising concerns about the longer-term impact on Afghanistan’s mobile market.
A defining feature of the award was the choice of auction format: a sequential series of combinatorial, first-price, sealed-bid auctions. While seemingly simple, this design created significant complexity for bidders. Operators faced difficult trade-offs in deciding how far below their valuations to bid, how to balance bids across different spectrum combinations, and how to manage substitution effects between bands auctioned sequentially. These challenges materially increased the risks of bidding errors, bidder regret and inefficient outcomes.
The auction results also highlight a known drawback of first-price sealed-bid formats: material price differences for broadly substitutable spectrum. In Afghanistan, spectrum in the 1800 MHz and 2100 MHz bands—often regarded by the market as close substitutes—cleared at prices that differed by around 25%, outcomes that are difficult to justify in value terms and can undermine perceptions of fairness.
Overall, the auction can be considered a success in that all spectrum was assigned, the process appears to have been transparent, and significant revenues were generated. However, the experience reinforces an important lesson for regulators: auction formats that appear simple can hide substantial strategic complexity, increasing the risk of inefficient outcomes. In this case, the regulator appears to have avoided a poor outcome, but largely by circumstance rather than by design.
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