Everything Everywhere To Begin Spectrum Sale

Everything Everywhere, the UK’s largest mobile network by subscribers, is set to auction off some of its spectrum, in a move which could raise up to £400 million.

According to the Financial Times, Everything Everywhere has appointed the Royal Bank of Scotland to oversee the process, with the sale mandate to begin next week.

Rare lot

Everything Everywhere, which was formed after Orange and T-Mobile merged in July 2010, is being forced to sell a quarter of its 1800MHz bandwidth by the European Commission as part of a deal to gain its approval. The sale needs to be concluded before the delayed 4G spectrum by Ofcom gets underway.

The auction is a rarity, and competition is likely to be intense as networks struggle to cope with surging demands from users who increasingly want to use their smartphones for data intensive acitivities such as streaming video and social networking.

The FT has said that rival networks Vodafone, O2 and Three could make bids, while companies with an interest in mobile services, such as BT, Sky, Virgin, Google and Apple are rumoured to be interested. It is also speculated that strategic bids could be made by those keen to take advantage of the overall shortage of spectrum for mobile services.

Reinvestment Plans

The price which Everything Everywhere could attract for the spectrum depends on whether it would accept a bid from a direct rival, however it has indicated that the proceeds would be reinvested, despite concerns the money could be taken offshore in payments to its parent companies, Deutsche Telekom and France Telecom.

In November, Everything Everywhere announced that it had successfully refinanced its £875 million debt with a new loan and credit facility, while it has also pledged to invest £1.5 billion into improving its mobile network in preparation for the arrival of 4G.

However, the company is likely to be disappointed by Ofcom’s revised proposals for the UK 4G spectrum auction which mean that it won’t have spectrum reserved, despite the regulatory authority previously indicating it would do so.