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MásMóvil's 'remedies' to Digi complicate the rural 5G mega-contest

MásMóvil could have to ask the Government to authorize a modification of its rural 5G offer, since it has agreed to sell to Digi part of the radio frequencies that it promised to use to compete in the public tender. If this modification of the offer is authorized and MásMóvil obtains many subsidies from the plan, its rivals could challenge it, increasing the litigation in the already controversial project.

Last December, Digi announced an agreement with MásMóvil to buy 60 megahertz (MHz) of radio spectrum. The agreement was part of the pact that the European Commission has forced between Digi and MásMóvil-Orange so that the latter received the green light for their merger. The frequencies that Digi will receive from MásMóvil – for 120 million euros – include spectrum in the 1,800 MHz, 2,100 MHz and 3.5 GHz bands, one of the so-called “priority bands” to deploy 5G networks. But these frequencies of the 3.5 GHz band are part of those that MásMóvil has proposed to use in the mega rural 5G public tender called by the Government and which will be awarded in the coming weeks.

This mega-contest, called Unico5G Redes Activas , incorporates the largest financial allocation in history in public subsidies in the telecom sector, with 544 million euros from NextGen European funds. And it will be used to accelerate the deployment of 5G networks in towns with less than 10,000 inhabitants, subsidizing 90% of the cost.

To participate in the contest it was a requirement to have the “priority frequencies” of 5G, that is, fundamentally those of the 700 MHz band and those of the 3.5 GHz band. For this reason, the entire sector imagined that the contest would be a struggle between Telefónica, Orange and Vodafone, the three largest operators, which are the ones that have frequencies in those two bands.

But MásMóvil entered the contest using the frequencies it controlled in the 3.5 GHz band, despite not having frequencies in the 700 MHz band. Its candidacy was a surprise for the rest of the contenders, including Orange, with the one that is going to merge, but also for Telefónica and Vodafone .

The MásMóvi l network is very small. It represents between a third and a quarter of its rivals in number of sites: it has about 5,500 4G sites compared to the 20,515 that Telefónica had at the end of 2022, the 18,820 of Vodafone and the 17,371 of Orange on the same date . And, furthermore, it is deployed mainly in large cities, to capture the largest possible proportion of traffic.

This means that MásMóvil theoretically starts with disadvantages when it comes to competing, since in many areas where its rivals can reuse their 4G sites, MásMóvil will have to create them from scratch, contracting the towers and fiber access from third-party providers. Furthermore, since it does not have the 700 MHz frequencies, it would have to install a greater number of locations to provide the same coverage, since its technical solution, instead of using the combination of the 700 MHz frequencies and the 3.5 GHz – the model of its three rivals – will use a combination of the 3.5 GHz band with the 1,800 MHz band, which requires the deployment of a greater number of sites.

These two bands -1,800 MHz and 3.5 GHz- committed to the tender are part of the package that will be sold to Digi.

Challenges

This will probably mean that MásMóvil should ask the Government to authorize a modification of the offer it has submitted to the contest. And if that were to happen, and MásMóvil obtained a significant portion of the subsidies, sector observers consider it likely that the other two competitors, Telefónica and Vodafone, would challenge the result. It must be remembered that Telefónica aspired to achieve great success in this contest, since the Government’s indirect veto to use the Chinese Huawei networks has been a great handicap for Orange and Vodafone, which have given up presenting themselves in those provinces – 30 of the 50 total – where their network is supplied by the Chinese group. In fact, both Vodafone and Huawei have filed contentious administrative appeals against the rules of the contest for this reason, considering that it leaves them at a disadvantage, so the rural 5G contest is already born with a burden of litigation. For this reason, Telefónica was confident of winning easily in those 30 provinces, an objective that is now put at risk by the competition from MásMóvil.

Possible modifications

However, some sources in the sector point out that the potential modification of a competitor’s offer is already contemplated in the contest rules, so it should not generate any problems. Furthermore, they also point out that, in the worst case scenario and if the Government refused to accept a modification of MásMóvil’s offer, what could be changed would be the pact with Digi, offering the Romanian telecom company other frequencies in the 3.5 GHz, but coming from those that Orange has instead of those from MásMóvil.

Finally, these sources point out that the incentive for Telefónica and Vodafone to judicialize the process is small since the calendar to execute the investments is very demanding, since they have to be finished in February 2026, so there are only two years, a deadline almost impossible to meet.

Any judicial action that paralyzed it would only increase the risk of missing the deadline and putting the collection of subsidies at risk.

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