Tension on the airwaves: Rival fights One NZ plan to buy more spectrum

One NZ has agreed to buy Dense Air, a firm that owns rights to a big chunk of mobile spectrum.

Chief executive Jason Paris says the purchase will increase 4G and 5G network capacity for the former Vodafone NZ, benefiting customers. “Think of it like adding an extra lane on the motorway.”

But Spark, which currently leases spectrum from Dense Air, would lose out. And 2degrees has flagged what it sees as “potential competitive harm”. The Commerce Commission is set to referee.

The regulator confirmed One NZ had applied for clearance to buy Dense Air but it had yet to publish its application.

The UK-based Dense Air entered the New Zealand market in 2018 when it paid US$17.5 million (then NZ$25.75m) to acquire a big chunk of

5G-friendly airwaves (specifically, rights through to 2028 for two 35MHz blocks of 2.6GHz radio spectrum).

Dense Air bought its total of

70MHz of spectrum from two parties: Cayman Wireless, a subsidiary of Canada’s Craig Wireless and Blue Reach, owned by rich-lister and CallPlus founder Malcolm Dick.

One NZ did not put a price tag on its pending deal.

But with 5G network upgrades now well under way, and an evergrowing thirst for mobile data, it’s likely to be well north of the $25.75m that Dense Air paid.

Dense Air immediately leased some of its 5G spectrum to Spark.

Although the Commerce Commission has yet to publish the clearance application, the regulator did note in a brief statement that both Spark and One NZ were currently using Dense Air spectrum for 4G and 4G fixed-wireless services and that One NZ planned to use it for 5G if the deal received the green light.

It remains to be seen what Spark makes of One NZ’s bid to grab its extra lane. The Herald has asked Spark for comment.

‘Potential competitive harm’

Meanwhile, 2degrees has already gone on the front foot.

“Spectrum has been crucial to 2degrees’ ability to disrupt and bring competition and choice to consumers benefiting all New Zealand telecommunications customers,” a spokesman said.

“Because of this fundamental role in effective competition, 2degrees wants to make sure when spectrum changes hands it does so appropriately. Any transaction that enhances spectrum disparities and has the potential to cause competitive harm, as this one does, must be scrutinised by the Commerce Commission.”

The 5G auction that never was

In May, the Government cancelled its planned 5G spectrum auction in favour of giving Spark, One NZ and 2degrees 80MHz of spectrum each. The three mobile players paid nothing for the spectrum but, as a quid pro quo, each pledged to spend $24m (on top of existing budgets) to expand 5G mobile coverage into previously uncovered provincial and rural areas. Additionally, 100MHz of spectrum was allocated to a pan-iwi body as part of an arrangement to sideline a Treaty claim on airwaves.

One NZ spokesman Matthew Flood said that, if the Dense Air deal was approved, the telco’s 5G spectrum holdings would consist of the 80MHz direct allocation from the Government plus 70MHz from Dense Air.