Italy 5G Auction

Italy has set a new record by auctioning its high-speed airwaves for the 5G. A total record of $7.6 billion will help to upgrade the network.

The bidding process took two weeks and saw the price of the most coveted airwaves soar as companies battled for a chance to offer the 5G services. The 5G will offer a faster download speeds for video and gaming. It will also help to facilitate self-driving cars and connect multiple devices.

Telecom Italia SpA and Vodafone Group Plc have each committed to pay about 2.4 billion euros ($2.8 billion) for the largest blocks. The government wasn’t expecting the auction would double the estimated sales price.

The question remain how the companies will turn profit on the 5G once the network is installed?

The obvious winner in the auction is the Italian government, with the purchase of the bigger blocks Telecom Italia and Vodafone have the advantage over the CK Hutchison Holdings Ltd.’s, Wind Tre and France Iliad SA.

“Today, it stings. Longer term, the strategic benefit accrues to TI and Vodafone,” said Mirchandani in a note.

The most intensive bidding was on the 3.7-gigahertz airwaves that offers the stronger signals in built-up urban areas, according to a statement made by the Economic Development Ministry. That piece of spectrum attracted about 4.35 billion euros

Iliad bid 1.19 billion euros for a smaller chunk of the blocks, the French company in committed to enter the Italian market. Wind Tre bid 517 million euros and Swisscom AG’s Fastweb committed to 33 million euros.

At the end of the bidding the carriers are required to pay a portion upfront this year, following by yearly installments with the bulk of the fees due by 2022. By auctioning those blocks will help to replenish Italy’s reserves.

South Korea had the previous sales record but now Italy as set a new record price with the 3.7 GHz spectrum.

The Italian industry will have less cash to spend on antennas and radio systems once the auction is paid . The equipment for the 5G networks is designed to be denser than our current technology.