Annual
report 2020

Licences and regulations

To be able to render mobile telecom services we require access to radio spectrum.

The amount of spectrum that is at our disposal influences the competitiveness and quality of the services we render and ultimately the customer experience. This is especially important in the light of huge growth in mobile data consumption.

In order to continue to assure the best customer experience we need to continuously optimise our effective use of spectrum. In 2020 we concluded the 1st phase of Refarming project and extended Orange LTE spectrum resources in 1800 MHz and 2100 MHz band and brought LTE2100 MHz band country wide. During the 1st phase LTE2100 MHz frequency was deployed as a 10 MHz carrier with remaining 5 MHz dedicated to UMTS.

The 2nd phase of Refarming project started in 2020 and will be concluded in 2021. Scope of this phase is aimed at extending LTE2100 10 MHz carrier to 15 MHz by removing UMTS2100 carrier. Afterwards, entire Orange 2100 MHz spectrum is to be dedicated to LTE (or LTE and 5G DSS) service and total Orange LTE bandwidth should reach 50 MHz.

The main point of concern is however the acquisition of frequency resources necessary for 5G development. It is assumed that three bands will be used for the new generation network: 3.4–3.8 GHz, 700 MHz and 26 GHz.

On March 6, 2020, following two rounds of public consultation, the President of UKE announced the launch of an auction procedure to allocate four nationwide frequency blocks in the 3480–3800 MHz range, the primary pioneer band for 5G.

Four licences of 80 MHz each, valid for 15 years, were to be allocated in the process.

Only one entity from each group of companies was eligible to participate in the auction. Each participant (or its group) had to demonstrate a record of investments of at least PLN 1 billion in telecommunications infrastructure between 2016 and 2018 and to hold a frequency licence in the 800, 900, 1800, 2100 or 2600 MHz band (it is of paramount importance, as the 5G network will be initially deployed in a Non-Standalone (NSA) architecture). The starting price for each block was set at PLN 450 million. The auction winners were to launch 5G over at least 700 base stations using the allocated frequencies by the end of 2025.

In April 2020, due to the pandemic situation the President of UKE suspended the auction procedure; later, as a consequence of changes in telco law regarding the implementation of the new requirements for the safety and integrity of telecommunication infrastructure and services, auction was cancelled.

Details of telecommunications licences are as follows

(in PLN millions) Acquisition date Years to expiration (2) Net book value
At 31 December 2020 At 31 December 2019
800 MHz 2016 10.1 2,062 2,266
900 MHz 2014 8.5 204 228
900 MHz (1) 2018 12
1800 MHz (1) 2013 7.0 111 127
1800 MHz 1997 6.6
2100 MHz 2000 2.0 195 290
2600 MHz 2016 10.1 79 87
Total telecommunications licences 2,651 3,010

On June 12, 2020 Orange Polska received a decision on the auction annulment. In September, the Polish parliament appointed the new President of UKE.
Until May 2021 the new auction process has not yet been relaunched. The delay is linked to prolonging governmental works on cybersecurity act.

Due to the auction annulment in 2020, the Company has decided to implement Dynamic Spectrum Sharing (DSS) in the 2100 MHz band, which allows dynamic allocation of spectrum resources to 4G or 5G as required. Currently over 1600 stations enable such 5G service for OPL customers.

700 MHz band is currently required to be available by June 30, 2022. However, the availability of this part of spectrum also depends on international arrangement with eastern neighbours of Poland, where this spectrum is used for digital and analogue TV and also for radionavigation (in Russia). Additionally model of the allocation of this spectrum still hasn’t been decided. There are advanced analyses on the potential allocation of 700 MHz to entity with majority of shares owned by the State which would act as wholesaler (project #Polskie5G). Such a possibility to allocate 700 MHz has been written in the currently proceeded draft versions of Cybersecurity Act and Electronic Communications Law.

Perspectives for allocation of 26 GHz band were consulted by UKE with the market in 2020. Taking into account availability of devices, general level of 5G maturity and delay in C-band allocation we don’t expect allocation of this band sooner than in 2023.

Current distribution of frequencies for the 700–2600 MHz bands and 3400-3800 MHz bands

Orange-2020-grafiki_czestotliwosci Orange-2020-grafiki_czestotliwosci

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