By Lee Min-hyung
KT and LG Uplus have become the biggest beneficiaries of the recent spectrum auction, as they won bids at minimal costs, analysts said Tuesday.
The analysts say it is hard to tell the winners from the losers among the three bidders which also included SK Telecom, as no fierce competition ensued from the auction.
But experts said the result shows KT and LG Uplus may have slightly outperformed SK Telecom. This is because they won their own bandwidth at a minimum bidding price, while the nation’s largest mobile carrier had to pay some additional 300 billion won ($263 million) beyond the reserve price in its bid for 60MHz bandwidth in the 2.6GHz frequency.
KT, the second-largest local carrier, won a 20 MHz bandwidth in the 1.8 GHz for a minimum bidding price of 451.3 billion won. Things are no different for LG Uplus which won 20MHz in the 2.1GHz frequency at a reserve price of 381.6 billion won.
When it comes to the two carriers, KT appears to have outperformed LG Uplus in terms of winning a more cost-effective deal, as KT’s 1.8GHz frequency comes with a 10-year license while the government offers only five-year licenses for LG’s 2.1GHz frequency.
“KT has paid the least amount among the three, in exchange for using each 1MHz bandwidth per year,” Ahn Jae-min, an analyst at NH Investment & Securities, said in a report to investors.
The company will be able to reduce additional investments as KT has already been using another 40MHz bandwidth in the same 1.8GHz frequency, according to the analyst.
He said expectations are that the company will establish a stronger broadband network infrastructure by adding the 20MHz bandwidth to the existing 40MHz one.
As the process does not require further investment, the company can reduce costs to expand its network infrastructure.
LG Uplus has also somewhat benefitted from the recent auction, as the 20MHz bandwidth in the 2.1GHz frequency was seen as the fiercest battlefield due to its wide range of uses.
“It is a very positive sign for LG Uplus to win the golden spectrum at the minimum bidding price,” he said. “But it is true that the relatively high price of the frequency may come as a burden for LG Uplus’ operating profit.”
Moon Jee-hyun, an analyst at Mirae Asset Daewoo Securities, said: “KT can now interwork the existing bandwidth in the 1.8GHz frequency with the recently acquired bandwidth.”
On top of that, the company won the bid at the reserve price, which is a positive sign for the mobile carrier, the analyst said.
“A good sign for LG Uplus is that the company spent the least amount at the recent auction,” he said. “But the 20MHz in the 2.1 frequency is the most expensive when calculated by unit price.”
The much-hyped spectrum auction ended Monday, and raised 2.11 trillion won. Market insiders voiced their consensus that the result was “boring” as it was below the market estimation of 2.5 trillion won.