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Workshop 1 - Spectrum Valuation and Auction Theory

Coordinated by Coleago Consulting, this one day workshop comprises of two sessions.

The morning session will provide a practical, step-by-step guide to valuing spectrum for spectrum auctions, spectrum renewal or in negotiating Administered Incentive Pricing.  This session will also include a discussion of the practical implications of network sharing and its impact on spectrum valuation.

The afternoon will explore the issues and challenges associated with auction design and developing auction bidding strategy and will also include a mock spectrum valuation exercise.

Step-by-step guide to valuing spectrum and implications of network sharing

The guide to valuing spectrum begins by explaining how to establish the appropriate framework with which to value spectrum. The framework discussion will cover conceptual issues such as:

• the first principles of spectrum valuation and how spectrum values for both the operator and its competitors relate to auction bidding strategy;
• approaches to valuation;
• scenario planning and business case specification such as the reference or base case as well as identifying the optimal “with spectrum” scenario; as well as identifying sources of spectrum value.

The valuation workshop will also look at the implications of network sharing deals on spectrum valuation as well as the practical issues that might need to be addressed before forming a netco or bidding consortium in a spectrum auction.

This discussion also includes advice on how to prepare for package based auctions (e.g. the Combinatorial Clock Auction format) where the number of potential valuations can be counted in the hundreds, thousands or even millions.

The workshop then proceeds to explore the practical issues associated with implementing the framework such as project team structure, governance and establishing Excel modelling tools. In the remaining steps we offer advice and examples of how to develop and benchmark the assumptions which will be the key drivers of spectrum value; the critical factors to consider when reviewing the resulting business plans and spectrum values and how best to present and communicate the key conclusions.

The valuation stream concludes with a spectrum valuation clinic (which can continue over lunch) where participants have the opportunity to highlight some of the specific challenges they face and Coleago will provide advice on how best to confront those challenges.

Auction bidding strategy and a practical spectrum valuation exercise

This workshop begins with a practical review of present day spectrum auction theory and why governments and their auction advisors have chosen some of the more common auction formats that are presently in use such as the Simultaneous Multi-Round Ascending (SMRA) and Combinatorial Clock Auction (CCA) formats. Areas to be covered include:

• principles of auction design including single round and ascending auctions as well as first and second price rules, activity rules, spectrum caps and reserve prices;
• how to prepare for a spectrum auction including setting objectives and bid limits, developing bid strategy, development of software bid tools and preparing the bid team including mock auctions. We will also discuss some of the particular challenges with more complex auction formats such as CCA.

After the auction theory session we will conduct a simplified spectrum valuation exercise where participants will get hands on experience valuing spectrum for an operator in a fictitious country. Up to five teams will be involved in the exercise and the team getting closest to the facilitator’s valuation will win the contest. If time permits we may also conduct some simple sealed bid auctions using a first price or second price rule to reinforce the auction theory. We will then conclude the practical exercise with an analysis of the outcomes.

Agenda

09:30 - 10:00  Registration and Welcome Coffee

Morning Session: A Step-by-Step Guide to Spectrum Valuation

10.00 - 11.00  Session 1: Introductions and Spectrum Developments

11.00 - 11.15  Morning Break

11.15 - 12.30  Session 2: Valuing Spectrum

12.30 - 13.30  Lunch and Spectrum Valuation Clinic

An opportunity for participants to speak to the Coleago team on a one-to-one or group basis to highlight some of the specific challenges they face and receive advice on how best to confront those challenges.

Afternoon Session: Auction bidding strategy and a valuation exercise

13.30 - 14.15  Session 3: Preparing for a Spectrum Auction – bidding strategy

14.15 - 14.30  Afternoon Break

14:30 - 16:30  Practical Session: Valuation Exercise

This session will offer participants the chance to get hands on experience valuing spectrum for an operator in a fictitious country in a simplified exercise. Up to five teams will be involved and the team that gets closest to the facilitators valuation will be the winner. If time permits we might also include some sealed bid auctions.

16:30 - 17:00    Session 5: Review of Results and Summary

17:00  End of Workshop