Our Experts Comment the Times Series

See All the Comments

A Bit Of Fresh Air

11 February 2019 by lberuti

Since the year 2000, spectrum auctions in the telecom industry tend to send shivers down credit investors’ spine, as they remember the pile of debts operators had to assume when they first positioned themselves. Late last week, Switzerland announced the results of the sale of additional mobile spectrum intended to allow mobile network operators (MNO) to launch 5G services. And the results were surprisingly benign. Altogether, the three Swiss MNO spent a combined CHF380mln. Salt, MATTER’s (Matterhorn Telecom Holding SA) unit, had to spend a mere 0.1CHF per Megahertz per population, far below the roughly CHF0.4 operators had to spend during a similar auction in Italy. They were able to secure a blend of spectrum in the low, mid and higher frequency bands, including some in the valuable 700mHz and 1400MHz. Even better for existing operators, Dense Air, the London based telecom firm, dropped out of the bidding process, putting to rest rumours that it was poised to enter the swiss market as the country’s fourth MNO. After the stress they had to endure early last week when news of the potential merger between Sunrise and UPC Schweiz left them facing the prospects of Salt being squeezed by an enlarged competitor, MATTER’s investors cheered the results and sent the company’s 5-year risk premium another 20bps tighter at 414bps. That is 53bps tighter than the wides reached Thursday night before the auction results.