The Office of the Communications Authority (“OFCA”) announced today (8 December 2014) that a total of 49.2 MHz of paired radio spectrum in the 1.9 – 2.2 GHz band was successfully auctioned off to three mobile network operators at total spectrum utilization fees (“SUF”) of HK$2.42 billion.
By way of background, 118.4 MHz of paired spectrum in the 1.9 – 2.2 GHz band were assigned in 2001 to four incumbent spectrum assignees (viz. Hong Kong Telecommunications (HKT) Limited (“HKT”), CSL Limited (“CSL”), Hutchison Telephone Company Limited (“HTCL”) and SmarTone Mobile Communications Limited (“SmarTone”)). The assignments, which last for 15 years, will expire in October 2016.
Following the decision of the Communications Authority (“CA”) in November 2013 on the arrangements for re-assignment of the concerned spectrum and the CA’s decision in April 2014 to give consent, with conditions imposed, to the acquisition by HKT Limited (the parent company of HKT) of CSL New World Mobility Limited (the parent company of CSL), HKT, HTCL and SmarTone accepted the right of first refusal in August 2014 for re-assignment of 69.2 MHz of the concerned spectrum. The remaining 49.2 MHz of spectrum is hence available for re-assignment through auction.
Three mobile network operators, viz. HTCL, SmarTone and China Mobile Hong Kong Company Limited (“CMHK”) took part in the auction which commenced at 9:20 am this morning, and came to a satisfactory conclusion after a total of 6 bidding rounds at 2:30 pm today. The provisional successful bidders, the radio spectrum under bidding and the SUF determined in the auction are tabulated below:
| Provisional Successful Bidders | Radio Spectrum Bid | SUF Payable (HK$ million) |
|---|---|---|
| SmarTone | Frequency Band A1 (1920.3 – 1925.3 MHz paired with 2110.3 – 2115.3 MHz) |
510 |
| CMHK | Frequency Band A2 (1925.3 – 1930.2 MHz paired with 2115.3 – 2120.2 MHz) |
470.4 |
| CMHK | Frequency Band A3 (1930.2 – 1935.1 MHz paired with 2120.2 – 2125.1 MHz) |
500 |
| SmarTone | Frequency Band A4 (1960.0 – 1964.9 MHz paired with 2150.0 – 2154.9 MHz) |
470.4 |
| HTCL | Frequency Band A5 (1964.9 – 1969.8 MHz paired with 2154.9 – 2159.8 MHz) |
470.4 |
| Total | 49.2 MHz | 2,421.2 |
“HTCL acquired a total of 9.8 MHz of spectrum today. Together with the 19.8 MHz of spectrum over which it has exercised its right of first refusal for re-assignment earlier, HTCL would be re-assigned 29.6 MHz of spectrum in the 1.9 – 2.2 GHz Band in the new term, i.e. it would be re-assigned its existing spectrum holding in the same band.
“SmarTone acquired a total of 19.8 MHz of spectrum today. Together with the 19.8 MHz of spectrum over which it has exercised its right of first refusal for re-assignment earlier, SmarTone would be re-assigned 39.6 MHz of spectrum in the 1.9 – 2.2 GHz Band in the new term, i.e. it would be assigned 10 MHz in excess of its existing spectrum holding in the same band.
“As to CMHK, it is not an incumbent spectrum assignee. It would be assigned a total of 19.6 MHz of spectrum in the 1.9 – 2.2 GHz Band in the new term.
“While 29.6 MHz out of the 118.4 MHz in the 1.9 – 2.2 GHz band will change hands with effect from October 2016 (i.e. from HKT to SmarTone and CMHK), the incumbent and the new spectrum assignees would have about two years to prepare for the necessary network reconfiguration and the roll out of their networks respectively,” a spokesperson of OFCA said.
“OFCA will liaise closely with the mobile network operators concerned to ensure a smooth changeover during the run up to October 2016,” the spokesperson continued.
“Mobile network operators would continue to compete on service features, service quality, and offer a wide variety of voice/data tariff packages and advanced services for the choices of the consumers. The spectrum re-assignments to take effect in October 2016 would create new momentum for the continued development of Hong Kong’s vibrant mobile market,” the spokesperson added.
The concerned spectrum will be assigned for a term of 15 years, starting from 22 October 2016 until 21 October 2031. Each provisional successful bidder is required to inter-alia submit a letter of credit by early March 2015 to guarantee payment of the SUF concerned before the actual re-assignments of the spectrum take effect.
Office of the Communications Authority
8 December 2014