We provided end-to-end 5G spectrum auction support to a regulator of a developed market, as part of its 2.1GHz spectrum award

The problem

• A regulator in a developed country was preparing to reassign spectrum rights in the 2.1GHz band (primarily used for 3G) in a way that would allow service continuity and refarming for 5G, and it appointed Analysys Mason to conduct spectrum valuation, design the auction framework and support the auction process

The solution

• We first made assumptions on some key valuation parameters, including wireless market development, competitive market dynamics, future spectrum scenarios, operator deployment scenarios, and 5G network equipment costs
• We then developed an in-depth spectrum valuation model to calculate the differences in cashflow between various scenarios for each operator
• Based on the valuation model results, as well as spectrum pricing benchmarks in other countries, we made recommendations on the reserve price

• With our partner DotEcon we made recommendations on the auction frame-work, including how much spectrum to set aside for legacy services, the need for spectrum caps, and candidate auction formats to reduce aggregation risks

• We also assisted the regulator to review financial capability submissions, for pre-qualification of bidders before the auction

• Together with DotEcon, we supported the auction itself, which involved: developing auction rules and bidding procedures; setting up and testing a closed network electronic auction system; providing materials and training for the auction; and conducting and managing the auction process

Figure: Recommended reserve price range

The result

• We developed a reasonable range of valuations and provided an interpretation of these results to help the client understand the value drivers

• We facilitated the auction framework design process and helped to organise and manage the auction, which concluded successfully