KEY POINTS:
In its second deal in as many days, aspiring mobile operator NZ Communications has signed up to buy a chunk of radio spectrum from Telecom.
Yesterday, Telecom announced it would sell for an undisclosed sum 5MHz out of a block of about 20MHz of spectrum it owns suitable for mobile services.
The deal comes a day after NZ Communications announced it had signed a national roaming agreement with Vodafone enabling future customers to get coverage in areas its mobile network doesn't cover.
NZ Communications plan to launch a third mobile network, beginning in the three main urban centres of Auckland, Wellington and Christchurch.
Last week, the Government offered Telecom and Vodafone the right to renew their 800MHz and 900MHz spectrum holdings for another 20 years - due to expire between 2011 and 2012 - on the condition they offered at least 5MHz of spectrum to an aspiring mobile operator within six months.
In exchange phone companies would pay $3.8 million plus GST per MHz for renewal, plus be eligible to purchase an addition 7.5MHz block.
If either Telecom or Vodafone decided against selling a block of its spectrum to a new mobile operator, the 7.5MHz would be auctioned. Previously Telecom had used 850MHz spectrum to run its 025 network which was switched off in March.
"This spectrum was not currently being used by Telecom," said the company's group technology officer Greg Patchell.
"Over the past several months we've run a comprehensive tender process to select a purchaser and the bid from New Zealand Communications was the most attractive."
The retained spectrum will be used to provide coverage in rural areas when Telecom completes its new $300 million Wideband-CDMA mobile network.
The deal with NZ Communications gives Telecom certainty of spectrum holdings for more than 20 years.
On the airwaves
Radio spectrum is used by telecommunications companies to provide mobile services including voice calling, text messaging and wireless broadband.
The Government is attempting to break-up the mobile duopoly of Vodafone and Telecom by encouraging them to sell a portion of underutilised spectrum to a new entrant.
Telecom yesterday agreed to sell would-be third mobile operator NZ Communications a chunk of 850MHz spectrum in exchange for an easier renewal of its remaining 850MHz spectrum in 2012.
800MHz and 900MHz spectrum bands are essential for extending mobile networks beyond urban areas.
