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5G Auction in Germany: Vodafone, Telefonica Buy Spectrum

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In one of the longest auctioning processes, Germany reportedly raised a record €6.5 billion ($7.4 billion) by offering 5G spectrum in various frequency bands to telecom carriers. The auction involved 497 rounds of bidding for the 41 blocks on offer and generated significant interest among existing and new entrants in the market.

Although the bidders complained about an exaggerated spectrum price compared to other countries, a near three-month bidding process marked the initiation of a 5G rollout across Germany. However, carriers are likely to find it increasingly difficult to shell out additional dry powder to upgrade the existing network infrastructure for the nationwide deployment, and are widely expected to lag peers in countries like the United States, Japan and Korea.

Deutsche Telekom AG (DTEGY - Free Report) , the leading telecom carrier in Germany, bid €2.17 billion for 130 MHz of the 420 MHz of spectrum offered in the 2 GHz and 3.6 GHz bands. The company rued that the high bidding price robbed it an opportunity to speed up extensive network buildout in the country.

While Vodafone Group Plc (VOD - Free Report) snapped up 130 MHz for €1.88 billion, Telefonica Deutschland – the German subsidiary of Telefónica, S.A. (TEF - Free Report) – secured 90 MHz for €1.42 billion. The auction marked the entry of 1&1 Drillisch, a 'virtual' mobile player controlled by United Internet, which paid €1.07 billion for 70 MHz. The successful introduction of 1&1 Drillisch as the fourth operator in the country is likely to offer a healthy competition in the market

5G is billed as the technology of the future with faster download speed and seamless transfer of data. Leveraging state-of-the-art communication network architectures, 5G is touted to be the primary catalyst for next-generation IoT services. These include connected cars coupled with augmented reality and virtual reality platform, smart cities and connected devices that revolutionize key industry verticals.

Moreover, 5G is likely to augment the scalability, security and universal mobility of the telecommunications industry, which is expected to propel the wide proliferation of IoT. The telecom firms are facilitating its customers to move away from an economy-of-scale network operating model to demand-driven operations and seamlessly migrate to 5G by offering easy programmability and flexible automation.

As the battle for 5G supremacy intensifies, various countries are increasingly devising newer avenues to outsmart rivals. It remains to be seen whether in the global 5G race, Germany can indeed become a force to reckon with.

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