Taiwan raises more than 138 billion TWD in 5G spectrum auction amongst fierce competition

Taiwan completed its 5G spectrum auction on 16 January, after 261 rounds of bidding. Total bids reached 138.08 billion TWD (approximately USD 4.6 billion), DigiTimes reports, citing a statement from Taiwanese regulator National Communications Commission (NCC).

  • Chunghwa Telecom, Taiwan Mobile, Far EasTone Telecommunications and Taiwan Star Telecom won spectrum in the 3.5GHz band. Asia Pacific Telecom also participated in the auction. According to the same source, the unit price per 10MHz bandwidth in the 3.5GHz band reached TWD 5.075 billion, which made it “the most expensive 5G bandwidth in the world.”
  • Chunghwa Telecom won 90MHz of spectrum in the 3.5GHz frequency band for TWD 45.675 billion and also secured 600MHz in the 28GHz band for TWD 618 million.
  • Far EasTone won 80MHz in the 3.5GHz band with a bid of TWD 40.6 billion, as well as 400MHz in the 28GHz band for TWD 412 million.
  • Taiwan Mobile secured 60MHz of spectrum in the 3.5GHz frequency band for TWD 30.4 billion and 200MHz in the 28GHz frequency band for TWD 206 million.  Judging from Taiwan Mobile’s current business model, the company is likely to team up with Asia Pacific for rendering related 5G services, leveraging 60MHz bandwidths it won in the 3.5GHz band.
  • Taiwan Star won 40MHz in the 3.5GHz band for TWD 19.708 billion, and
  • Asia Pacific Telecom secured 40MHz of spectrum in the 28GHz frequency band for TWD 412 million.
  • Chunghwa Telecom and Far EasTone secured 90MHz and 80MHz of spectrum in the 3.5GHz band, respectively.  Digitimes says these two carriers are expected to compete fiercely in a number of 5G service segments, including IoT, AI and big data.

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Image result for image for Taiwan 5G auction

RCR Wireless: Taiwan to open 4.8GHz to 4.9GHz band for dedicated 5G testing

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Bloomberg had this to say about Taiwan’t 5G spectrum auction:

The rising costs for licenses shows carriers expect the faster networks — due later this year in Taiwan — will provide a market advantage over competitors. The auction results so far are “blowing away expectations,” New Street Research analysts said in a note dated Jan. 6.

“There is no sign that the bidding will end soon,” Sheih Chi-mau, chairman and chief executive officer of the island’s biggest carrier Chunghwa Telecom, said Monday night in remarks at a company event. “It may take a few more days. The competition is fierce.”

While some other sales of 5G spectrum in similar bands have drawn bigger totals, Taiwan’s is the richest relative to population, according to New Street.

Taiwan’s bidding war suggests strong demand for mid-spectrum airwaves like the 3.5Ghz band in other markets, including for a U.S. sale of the so-called C-Band that could bring about $50 billion.  Taiwan has about 29 million mobile phone accounts, an average of more than one per person, but its neighbor China has more than a billion. What makes Taiwanese subscribers especially attractive is that they’re the biggest consumers of data in Asia, according to researcher Tefficient. Average per-user data consumption at Taiwan’s carriers reached as high as 17.6GB per month, compared with 7.6GB in China and 8.5GB in South Korea.

South Korean carriers established the world’s first full commercial 5G services last April. They are expected to have reached 5 million subscribers by the end of 2019. Operators in other countries including the U.S., U.K., Japan and Australia have also offered limited services to the public with plans to introduce wider networks this year.

From LightReading— Robert Clark, contributing editor:

Taiwan’s 5G auction has completed its first round in near-record territory, with the five operators committing NT$138 billion ($4.6 billion) for more than three times the government reserve price.

Just over NT$137 billion went to the 3.5GHz band, putting the medium-sized Asian economy third behind Italy and Germany in aggregate spending and second in terms of spending per megahertz. Bids for the 28GHz frequencies raised about NT$1 billion.

But the auction isn’t over. The regulator, NCC, called a halt Thursday morning after the smallest player, Hon Hai-backed Asia-Pacific Telecom, withdrew from 3.5GHz bidding.

The process will resume on February 21, when the operators are expected to negotiate with each other for specific frequencies within the spectrum bands. The NCC said it would step in only if they are unable to reach agreement.

The biggest winners were Chunghwa Telecom, the number-two operator, which bid NT$45.7 billion for 90MHz of 3.5GHz spectrum, FarEasTone, which committed $40.6 billion for 80MHz, and Taiwan Mobile, which will pay NT$30.45 billion for 60MHz.

Table 1: Current Bids in Taiwan’s 5G Auction

Chungwha Telecom FarEasTone Taiwan Mobile Taiwan Star Asia-Pacific Telecom
3.5GHz 90MHz; NT$45.67B 80MHz; NT$40.6B 60MHz; NT$30.45B 40MHz; NT$19.71M N/A
28GHz 600MHz; NT$618M 400MHz; NT$412M 200MHz; NT$206M N/A 400MHz; NT$412M
Source: NCC Units.

Local credit agency Taiwan Ratings has warned that with debt loads already expected to rise to fund the 5G rollout, the unexpected high cost of spectrum is adding further pressure. It forecasts operators may “adopt a more conservative approach to infrastructure deployment.”

Investors aren’t too thrilled, either. Since the auction began a month ago, they’ve marked Taiwan Mobile down 4.4% and FarEasTone 2.1%. Chunghwa’s stock is unchanged.

Chunghwa Telecom, the part state-owned giant, has forecast annual 5G investment of up to NT$9-10 billion ($300-334 million), with total cost expected to significantly overtake its total NT$60 billion investment in 4G.

The official Central News Agency reported that telco execs have said privately that, because the sum raised far exceeds the government’s anticipated revenue take, they expect relief measures in the form of tax cuts, incentives, basestation subsidies or other measures.

So far none of these has materialized, but NCC Acting Chairman Chen Yaw-shyang says the government can introduce “administrative measures” to ensure consumers enjoy access to “high-quality and affordable” 5G.

He said the Taiwan cabinet would hold an interdepartmental meeting to discuss distribution of the auction proceeds, including investment in upgrading telecom infrastructure, Taipei Times reported.

The Taiwan Telecommunications Industry Development Association (TTIDA) has also called for 5G to be exempt from spectrum usage charges and for a delay on the issue of spectrum for private network services. (See Taiwan’s Telcos Seek Govt. Help as 5G Auction Blows Out.)

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References:

https://www.digitimes.com/news/a20200116PD221.html

https://www.bloomberg.com/news/articles/2020-01-07/taiwan-s-blowout-5g-auction-shows-carriers-willing-to-pay-big

https://www.lightreading.com/asia-pacific/taiwan-calls-temporary-halt-on-$46b-auction/d/d-id/756907?

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