Radio spectrum costly

The Government is likely to demand a higher price for New Zealand’s ‘‘digital dividend’’ radio spectrum after reviewing the result of an auction in the Netherlands and the tougher stance taken by Australia towards spectrum pricing, says an analyst.

Telcos, including the Dutch Vodafone company, agreed to pay a higher-than-expected €3.8 billion (NZ$6b) for the Netherlands’ digital dividend spectrum last month.

The spectrum, which is being freed up by the closure of analogue television around the world, is needed to build mobile networks using the latest 4G technology.

Japanese broker Nomura said the price paid in the Netherlands worked out at more than €2 a megahertz, per head of population, a rate that would value New Zealand’s digital dividend spectrum at well over $1b.

Australian Communications Minister Stephen Conroy set a minimum ‘‘reserve price’’ of A$1.36 (NZ$1.71) a megahertz, per capita, for its 700MHz digital dividend spectrum, which is scheduled to be auctioned on April 16.

That reserve would ensure Australia’s spectrum fetched at least A$3b (NZ$3.78b). This would equate to a value of $673m for the New Zealand spectrum.

The New Zealand Government is expected to auction its digital dividend spectrum later this year.

Vodafone’s Australian joint venture, Vodafone Hutchison, and Singapore-owned Optus, have both balked at the reserve price set by Senator Conroy even though it is about half the price per capita of the spectrum in the Netherlands.

Vodafone has said it would not bid in Australia and Optus described the price as ‘‘unworkable’’.

However, Sydney-based analyst Paul Budde said the price paid for the 4G spectrum in the Netherlands had vindicated Conroy’s stance.

Telstra was likely to stump up and he believed the New Zealand Government would now follow suit in demanding a minimum reserve price for its spectrum.