Telecos invest millions of 5G despite losses

The three main operators in the country (Telefónica, Orange and Vodafone) face the second half of the year with an investment horizon of more than 1,000 million euros only in 5G spectrum, after a first half of 2021 in which they have seen their income fall by just over 1%. In a market of strong competition in the sector, in which the telecos are reducing their margins, Telefónica, Orange and Vodafone They will have to disburse imminently the money that they have just offered in the auction of the 700 Mhz spectrum, one of the priorities for 5G, for the frequency blocks they have acquired.

As sources in the sector have informed EFE, for this spectrum purchased in this 700 Mhz band, each operator will have to pay additionally, Just for the fees, just over 15 million euros a year. This amount is added to the taxes that operators must pay for the 3.5 Ghz band, which was auctioned two years ago, but for which they have to pay an annual average of about 20 million each.

This means that each of these three telecoms will have to pay around 35 million euros a year just for the rates of the 5G spectrum acquired in these two bands (700 Mhz and 3.5 Ghz). Taking into account that the concession is for 40 years, only in rates they would pay 1,400 million euros, regardless of what they have paid for the blocks acquired during the 5G auction and in case this tax remains as it is.

5G

For 5G, the EU has chosen three types of bands, the 700 Mhz, the 3.5 Ghz, and the 26 Ghz. The first two have already been auctioned, the last one a week ago. The 26 Ghz, still has no date for it. The three operators bid 1,010.9 million euros for the 700 Mhz band, with which they raised the starting price by 15%.

Vodafone and Orange will have to pay 350 million euros each for the spectrum block they acquired and Telefónica 310.09 million euros. In this case, the payment system for this spectrum is unique, so they will have to pay it as soon as the central Administration requires them, that is, imminently.

Revenues drop 1%

This payment will have to be made after obtaining revenues as a whole in Spain in the first half of the year of 10,550 million euros, 1.04% less than last year. Telefónica earned 6,095 million euros, 0.2% less than last year; Orange, 2,368 million euros, -5.1% and Vodafone, 2,087 million euros, 1.75% more, in an equivalent calculation of its last fiscal semester.

In 2020, the three telecos invoiced a total of 21,518 million euros in Spain, 4% less than in 2019, in a trend that has brought them closer to 2000 figuresWhen they had half their mobile sign-ups, the internet had barely taken off and they operated with twice the number of staff. These revenues were recorded in a context of coronavirus, strong competition from the sector, a rise in demand for services and a decrease in tourists with the consequent effect on billing for ‘roaming’. Although revenues have been recovering, they are not growing yet.

More investment and margin war

The last to speak clearly has been the CEO of Orange Spain, Jean Francois-Fallacher, the only one who has appeared before the press to present the results of the quarter, when he stated that the Spanish market is “hypercompetitive”. As he explained, there are three operators (Telefónica, Orange and Vodafone) who are investing and, in parallel, there are “several players that use the networks and are destroying margins in the market.”

“We like competition” but in this case what happens is that the three operators that are investing “will have less capacity to do so if this situation persists.” In his view, “the challenge is a proper balance between those who invest and not”

Although they have not appeared to present results, both the president of Telefónica, José María Álvarez-Pallete, as well as the CEO of Vodafone Spain, Colman Deegan, have repeatedly called for a new tax framework and market regulation that takes into account the plurality of actors in the sector in Spain.

The Government has announced several measures to encourage these three operators to continue investing, such as increasing the 5G spectrum concession period from 20 to 40 years, as well as freeing them from paying the fee they have to pay to TVE.


Source: LA INFORMACIÓN – Lo último by www.lainformacion.com.

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