Spanish telcos welcome 40-year 5G licence windfall

Spanish telecoms firms welcomed the government’s decision to double radio frequency licences to 40 years at future auctions, including for 5G networks, calling it an important step for the struggling sector.

The change will give mobile operators and investors better visibility on their investment in the heavily indebted sector, which requires extensive spending on infrastructure such as fibre optic networks, industry sources told Reuters on Tuesday.

“It’s a windfall. We’re an overtaxed sector, and now suffering from the crisis,” one company source said. “We also ask that auctions’ starting prices be lowered, not raised, else they divert resources away from deploying mobile data networks.”

Several others sources in the sector echoed the need to make it easier to take part in auctions and to lower fees.

One industry source noted that Spain held Europe’s third-most costly radio frequency auctions even though the sector’s average income has fallen 35% since 2011.

A spokeswoman for France’s Orange (ORAN.PA), one of Spain’s leading mobile and broadband operators, said it would examine the government’s proposal before providing an assessment.

“Lengthening the duration of these concessions (is) a way of guaranteeing stability, predictability and adequate return on investment for the operators,” Spain’s economic and digital affairs ministry said.

The licence decision comes as Spain prepares to dedicate nearly 30% of the 140 billion euros ($169 billion) it will receive in European recovery funds to its digitalisation plan, particularly the development of 5G mobile data.

Economy Minister Nadia Calvino said on Monday that a series of auctions for the coveted radio frequencies were due – including for the 700 megahertz band typically used to deploy 5G data – all with the possibility of extending leases to 40 years.

“Forty years is an eternity in this sector. You could use the same frequency band for multiple purposes,” a third industry source said.

He suggested the government make its requirements for coverage in areas with low population density more flexible, or provide more subsidies, as operators often lose money in such places.