Croatia 4G spectrum sale raises $52 million

Croatian authorities have raised 300 million kuna ($52 million) from the sale of 800MHz spectrum to T-Hrvatski Telekom and Vipnet, both of which already operate networks in the country.

Each company has paid a fee set by regulatory body Hakom of 150 million kuna for 10MHz of paired spectrum, and will be required to cover at least 50% of Croatia within five years of a starting date Hakom has yet to specify.

Croatian authorities have raised 300 million kuna ($52 million) from the sale of 800MHz spectrum to T-Hrvatski Telekom and Vipnet, both of which already operate networks in the country.

Each company has paid a fee set by regulatory body Hakom of 150 million kuna for 10MHz of paired spectrum, and will be required to cover at least 50% of Croatia within five years of a starting date Hakom has yet to specify.

The companies will also have to pay spectrum usage fees of 800,000 kuna per MHz per year, spectrum management fees of 180,000 kuna per MHz per year and transfer 0.5% of the revenues they generate from 800MHz services into government coffers.

The licences are due to expire on 18 October 2024.

Hakom had put three 2x10MHz blocks of spectrum up for sale but T-Hrvatski, owned by Deutsche Telekom (Bonn, Germany) and Vipnet, controlled by Telekom Austria (Vienna, Austria), were the only companies to express interest in the airwaves.

Under regulatory rules, no operator is allowed to own more than one 800MHz block.

Given the lack of competition, the process may well have raised less than $52 million if Hakom had auctioned off the airwaves, as regulators have done in other parts of Europe.

The proceeds work out at approximately $0.59 per MHz pop, based on the coverage obligation, and half that amount if services were extended nationwide.

Even so, the figure looks low compared with prices paid elsewhere. Germany’s 800MHz auction of May 2010 raised $0.95 per MHz pop, while the French auction held in December last year raised $0.88.

Like other European telecoms regulators, Hakom has identified the spectrum band as particularly suitable for the deployment of LTE services in rural communities.

Base-station signals travel further in the 800MHz band than in higher frequencies, which means operators can cover wide areas more economically.

The drawback is that 800MHz spectrum is not compatible with some of the most appealing 4G devices, including Apple’s iPhone 5.

Both T-Hrvatski and Vipnet have been offering LTE services in Croatian cities using iPhone 5-friendly 1800MHz spectrum they already own.

Indeed, given the relatively undemanding 800MHz coverage obligations, and the weakness of the Croatian economy, the operators are likely to focus on their 1800MHz deployments in wealthier urban communities for the foreseeable future.