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By Clara-Laeila Laudette
MADRID, May 31 (Reuters) - Spain softened conditions and cut prices in its upcoming radio frequency auction by 15% for the core 700 megahertz band vital for next generation 5G mobile data services, drawing a welcome from debt-laden telecoms groups likely to bid for spectrum.
Seeking to incentivise participation, the government cut prices by 12.5% to 20% from last year, depending on the band.
"The conditions are still demanding, and the prices could have been lower, but we recognise and thank the government's efforts in improving conditions," said a spokeswoman for Spain's DigitalEs association, which represents the four largest mobile and broadband operators.
She said the terms balanced the state's need to boost revenues with a recognition of the sector's debt levels and importance to economic development.
The government also eased conditions for deploying services across the newly-allotted blocks, extending the deadline for rolling out coverage by a year and specifying exactly where operators must prioritise services.
"We wanted to make it very clear which places need to be covered (by 5G networks) - the previous coverage criteria were very broad and left a lot up to the companies," a spokeswoman for Spain's telecommunications and digital infrastructure department told Reuters.
Any obligation to grant third-party operators access to the infrastructure has disappeared from the conditions, a move which may draw attention from regulators in Brussels and Madrid - and smaller companies like MasMovil and Euskaltel which have relied on network-sharing agreements.
Neither MasMovil nor Euskaltel - currently in merger talks to create Spain's fourth-largest operator - were immediately available for comment.
As a further sweetener, the government said in April it would double the length of frequency concessions to 40 years, which operators cheered as providing greater visibility.
Orange - which this month announced it would lay off 485 employees to cope with Spain's highly fragmented, competitive market - declined to comment, while Vodafone said it was still studying the auction's terms.
"We wanted around 20% off the starting prices of every tranche," one source within the sector told Reuters. "But the overall formula is reasonable, with the extended compliance period and doubled amortisation time."
Spain has prioritised the development of 5G mobile data in its post-pandemic recovery strategy, earmarking nearly 30% of the 140 billion euros ($171 billion) it will receive in EU funds to a digitalisation plan.
Applications to participate in the auction are due by July 2, with the auction to be held before July 21.
($1 = 0.8201 euros) (Reporting by Clara-Laeila Laudette Additional reporting by Nathan Allen Editing by Mark Potter)