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Si.mobil Acquires Nearly Half of All the Available Slovenian Frequency Spectrum for 64 Million Euros

( 28.05.2014 )

Ljubljana, 28 April 2014 - The Agency for Communication Networks and Services published on its website today the results of the concluded Public auction for the assigning of radio frequencies for the provision of public communication services. For just under 64 million euros Si.mobil acquired nearly half of the total available frequency spectrum in the Republic of Slovenia, most of it for the period of 15 years. Si.mobil is satisfied with the obtained proportion of the radio frequency spectrum, as this provides a solid basis for its ambitious growth plans for the future, and provides a technical platform for future investments in network development with state of the art infrastructure. In three years Si.mobil will provide coverage to 95% of the Slovenian population with LTE technology, thereby also fulfilling the objectives of the Digital Agenda for Europe, by providing broadband internet access to at least 225 locations in rural areas, which are today counted among the so-called white spots, i.e. areas with no broadband access whatsoever.

Coverage Obligations and Spectrum Reservation 

The auction in Slovenia used a CCA format. The auction started on 3 April, and three Slovenian telecommunication operators participated. The rules of the auction were defined similarly to other CCA auctions which were recently conducted in Europe. An exception was a unique feature in the Slovenian auction - the special 2 x 10 MHz reservation of the most valuable 800 MHz frequency band for operators with at a market share of 15% or less.

The tender documentation also provided exact definitions regarding coverage obligations. The 800 MHz frequency band, which will come into use in Slovenia for the first time and which will be used for LTE technology, was divided into three categories - A1 (no special coverage obligations), A2 (with special coverage obligations), and the above mentioned A3 (for new entrants or for operators with a market share of 15% or less).

Si.mobil's Bidding Strategy 

Considering the existing spectrum and the planned strategy of future network investments, Si.mobil focused especially on the acquisition of the spectrum in the 800 MHz frequency band, with a moderate increase of its position in the 900 MHz and 1800 MHz bands. Si.mobil was also successful in its attempt at obtaining the A2 category in the 800 MHz frequency band, since it wants to take responsibility for providing broadband internet to rural areas. Because this is in service of meeting the objectives of the pan-European goals to bridge the digital divide and the coverage of the so-called white spots, there are expected to be fewer issues in obtaining building permits for the construction of the required infrastructure. Another of the company's strategic objectives was to acquire a share of the frequency spectrum that surpasses its current market share, thereby ensuring a strong foundation for strengthening its market position in the future.

Division of the spectrum

  800MHz 900MHz 1800MHz 2100 FDD [1] 2100 TDD 2600 FDD 2600 TDD
Before / 2 x 12.5 MHz 2 x 30 MHz 2 x 15 MHz 5 MHz / /
After 2 x 10 MHz 2 x 15 MHz 2 x 30 MHz 2 X 15 MHz 25 MHz 2 x 35 MHz 25 MHz
Duration from - to Mid 2014 - mid 2029 Jan. 2016 - Jan. 2031 Jan. 2016 - Jan. 2031 Sept. 2006 - Sept. 2021 Mid 2014 - Sept 2021 [2] Mid 2014 - mid 2029 Mid 2014 - mid 2029
Percentage of available spectrum won out of available in the auction 33 % 43 % 40 % 0 % [3] 100 % 50 % 50 %
Percentage of spectrum 33 % 43 % 40 % 25 % 71 % 50 % 50 %

Total percentage of all available spectrum at the auction won: 47 %

A Strong Strategic Position

The acquired spectrum provides Si.mobil with a unique strategic advantage, as it acquired a share of the spectrum that surpasses its current market share. This provides a strong base for ambitious growth plans in the coming years. The proportion of spectrum that Si.mobil acquired provides the company with a solid technical foundation for future investments in state of the art infrastructure. Si.mobil wants to offer its users a high level of quality and the best broadband network both in cities as well as in the even most remote rural areas.

Financial Implications and Financing

The purchase price for the acquired part of frequency spectrum in the total amount of almost 64 million euros must be paid in full (additional payment not covered already by the deposit) within 15 days of being delivered the decision from the Agency for Communication Networks and Services. Si.mobil will finance the spectrum acquisition with existing funds of the company and its owner, the Telekom Austria Group.

Si.mobil and Telekom Austria Group representatives have in the past already raised concerns regarding the exceptionallyhigh reserve prices for frequencies. During the three weeks of the auction, the five-percent increments increased the total price for frequencies to such an extent that its primary objective certainly does not seem to support the fast development of the telecommunications industry in Slovenia, as it seems more focused on contributing to the state budget. Even though there is an unquestionable correlation between the amount paid for frequencies and the speed and capability of investing in infrastructure, Si.mobil is strongly committed to fully realizing an ambitious 3-year rollout plan.

Compared to other European countries that held auctions or extended frequency licenses in the past few years, the relative and absolute prices of the Slovenian auction fall into the upper half.

Investments in Broadband Technology

In the last couple of years, Si.mobil has invested an average of 20 million euros per year in network infrastructure and technology. After the acquired frequencies, the amount of investments for the first three years of rollout will be significantly strengthened even further.

Accordingly, Si.mobil will provide 50% of the population with LTE technology already this year, which includes all Slovenian towns and cities. By 2017 at the latest, broadband services with speeds of at least 10 Mbps will be available to at least 95% of the population of the Republic of Slovenia. At the same time, Si.mobil's broadband internet will also be available to at least 225 locations in rural areas, which are today counted among the so-called white spots, i.e. areas with no broadband network access whatsoever.

The Statements from Si.mobil's Management

"At the auction we were striving to achieve three things: to acquire the spectrum that would make it possible for us to execute our ambitious growth strategy in the coming years, to obtain the appropriate amount of spectrum in the lower frequency band, which will provide our users with the best coverage with voice and data services, and to acquire the spectrum category that will allow us to meet the digital dividend objectives in eliminating the so-called white spots. With a focus on what is the best for our customers, we managed to achieve all the goals set. The total prices, which are in the upper half in Europe, and the reservation of the spectrum for an existing operator with a market share below 15%, which is a unique case in Slovenia, do, however, leave a somewhat bitter aftertaste." Boštjan Škufca Zaveršek, Deputy Chairman of the Management Board and Member of the Management Board.

"Si.mobil will in the next few years build a state of the art network for its users, available everywhere.I am enthusiastic about the exceptional package of radio frequency spectrum that we bought. Si.mobil now has the frequencies to continue with voice and data services and also to develop LTE in urban and rural areas, to support growing number of subscribers and the sharply growing volume of data." Ulrich Rokita, Member of the Management Board.

"In Slovenia, we acquired almost half of the available spectrum within the framework of the frequency auction, creating an excellent starting position for our ambitious growth plans. With the acquired frequencies we will be able to operate an outstanding LTE network going forward, while at the same time enhancing the overall network quality." Günther Ottendorfer, Chief Technology Officer, Telekom Austria Group.

More information about the auction:

At the electronic auction, which started on 3 April, three Slovenian telecommunications operators bid for 7- and 15-year use of frequencies in 10 categories, divided into 5 MHz blocks in bands from 800 MHz to 2600 MHz. The bidding took place in three phases, with the total reserve price set at 104.6 million euros, and the bidders had to have a deposit in the amount of at least 50% of the value of the frequencies in a special bank account of Bank of Slovenia for the duration of the auction. Among other things, the rules defined the so-called spectrum caps, which set the maximum amount of frequencies that an operator may acquire. A unique feature of the Slovenian auction was the special 2 x 10 MHz reservation in the most valuable 800 MHz frequency band for new entrants or operators with at a market share of 15% or less. The tender documentation also provided exact definitions regarding coverage obligations. The 800 MHz frequency band, which will come into use Slovenia for the first time, and will be used for LTE technology, was divided into three categories - A1 (no special coverage obligations), A2 (with special coverage obligations), and A3 (for new entrants or for operators with a market share of 15% or less). The A2 category required that the bidder which obtained this part of the spectrum provide broadband services with speeds of at least10 Mbps to 95% of the population of the Republic of Slovenia within three years, whereby the operator which acquired this category must within three years also provide broadband internet to a total of at least 225 locations in rural areas where there are the so-called white spots, as they currently have only partial or no fixed broadband network access.

[1] Si.mobil did not acquire new parts of the 2100 FDD band at the auction. The 2 x 15 MHz was acquired in 2006.
[2] 5 MHz was acquired in 2006 and expires in 2021.
[3] Just one block of 2 x 5 MHz was available in the auction and remained unsold.

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