Assisted an African regulator with the design and implementation of the country's first-ever spectrum auction, for spectrum licences in the 800MHz band

The problem

• Our client, the national regulator of a country in Africa, was preparing for the award of spectrum in the 800MHz band by means of an auction process
• Analysys Mason was appointed by the regulator to conduct a market assessment and provide auction design recommendations

The solution

• Our market assessment focused on use cases for the spectrum, likely bidders and potential competition considerations arising from award of the spectrum
• We built an Excel-based model to consider valuations from the perspective of both existing and potential new-entrant operators. These were cross-checked against normalised auction benchmarks of prices paid for similar spectrum in other markets with Analysys Mason’s spectrum auction tracker tool
  • using the results of our model and benchmarking, we made recommendations to the regulator on the appropriate level of reserve prices, spectrum caps and other key award criteria
• Our final recommendations covered all aspects of the auction’s design, in part drawing on precedent from spectrum auctions globally

Figure: New-player NPV progression based on spectrum valuation model (arbitrary units)

The result

• Our report provided the regulator with detailed recommendations for the planned auction as well as a strong understanding of the spectrum’s potential value to both an existing operator and a new entrant