‘An extra lane on the motorway’ - One NZ seeks clearance to buy 5G spectrum holder Dense Air; rival flags ‘potential harm’

One NZ chief executive Jason Paris says the deal would give his company's mobile customers the equivalent of "an extra lane on the motorway". Photo / Michael Craig

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 2degrees has flagged what it sees as “potential competitive harm”. The Commerce Commission is set to referee.

The regulator confirmed One NZ (owned by NZX-listed Infratil) 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 (a firm associated with the later days of failed Auckland wireless internet provider Woosh 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 underway, and an ever-growing 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. (Today, the telco says it no longer leases Dense Air spectrum.)

‘Potential competitive harm’

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.”

A spokeswoman for Spark said, “We’re pleased with the progress we’re making on our 5G roll out, and were the first to announce the commencement of our 5G standalone network build in July this year, which will enable New Zealanders to realise the full potential of 5G technology. We now have 90 locations across the country with 5G availability, from large cities to smaller, regional towns.”

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 (listed here). 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.

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.