China Mobile

China Mobile sets its sights on auction of reassigned 3G spectrum

The world's largest wireless network operator expects to secure HK licence when the government auctions the spectrum

PUBLISHED : Tuesday, 19 November, 2013, 2:52am
UPDATED : Tuesday, 19 November, 2013, 2:52am

China Mobile, the world's largest wireless network operator, is moving forward with plans to bid for the reassigned 3G spectrum that the Hong Kong government will take back from the city's four leading telecommunications service providers.

"We expect to get the spectrum in 2016 after the auction next year," Tiger Lin Zhenhui, the chairman of subsidiary China Mobile Hong Kong, told the South China Morning Post.

Lin, who also serves as chairman and chief executive of China Mobile International, disclosed that development yesterday amid the company's current efforts to sign up overseas users through "Jego", its mobile-internet voice call application that competes directly against Microsoft's Skype.

The industry's regulator, the Communications Authority, announced last Friday its decision to use a "hybrid" approach in renewing the expiring 3G spectrum licences in the 1.9-gigahertz to 2.2GHz band of SmarTone Telecommunications, CSL, Hutchison Telecommunications' Three Hong Kong and PCCW's HKT.

The government will seize and reauction one-third of each operator's 3G spectrum assignment in the fourth quarter of next year, while giving the right of first refusal to renew their respective 15-year licences for two-thirds of the spectrum that each one currently holds.

"I see this as a good decision and fair for the industry," Lin said.

But the four operators, whose 3G spectrum licences on the band under review will expire in October 2016, want the government to automatically renew all their 3G frequency assignments, based on long-standing industry practice and to prevent a severe degradation of 3G mobile services across Hong Kong.

In a report yesterday, analysts at Barclays said: "We would expect limited interest [in the reassigned 3G spectrum] from newcomers. We expect an efficient auction in which the incumbents look to accommodate China Mobile Hong Kong, yet win back some spectrum at reasonable costs."

The government has set the reserve price for the open auction next year at HK$48 million per megahertz.

China Mobile, which had 755.19 million subscribers on the mainland at the end of September, already provides 2G, 3G and 4G services in Hong Kong. Its local subsidiary provides 3G services by leasing network capacity from HKT and CSL.

In January 2009, China Mobile Hong Kong paid HK$494.7 million to acquire a chunk of spectrum in the 2.6GHz band to start development on its local 4G network.

It paid HK$170 million in February last year to add spectrum in the 2.3GHz band for that network, which was rolled out in April last year.