Australia’s largest telecommunications companies have criticised the federal government over the cost of mobile spectrum licences, arguing that the multibillion-dollar fees are driving up industry costs and limiting investment in network upgrades.

Executives from Telstra and TPG Telecom said the high price of access to spectrum, the radio frequencies used to operate mobile networks, could ultimately affect service quality and the price consumers pay for mobile plans.

TPG Telecom chief executive Inaki Berroeta said the current policy forces companies to balance three competing priorities such as strong infrastructure investment, affordable services and significant government spectrum charges. According to Berroeta, it is difficult for the industry to deliver all three at the same time.

His comments follow a decision by the Australian Communications and Media Authority to increase the expected cost of upcoming spectrum licence renewals. In December the regulator said telecommunications companies would collectively pay around A$7.3 billion for renewals by the end of the decade. Earlier projections had placed the figure between about A$5 billion and A$6.2 billion.

Berroeta argued that the repeated charging of spectrum licences effectively acts as a tax on essential communications infrastructure. He said the approach reduces the amount of capital available for investment in networks and infrastructure that underpin mobile connectivity across the country.

He also suggested Australia’s policy differs from approaches taken in parts of Europe, where regulators have sometimes prioritised network investment and service affordability over licence revenue. In several cases, governments have renewed spectrum rights without charging operators upfront fees, instead requiring companies to meet coverage expansion targets.

Telstra chief executive Vicki Brady has also voiced concern about the regulator’s pricing model. Telstra is expected to face licence renewal costs of around A$2.75 billion, which Brady said was roughly A$1.3 billion higher than what the company believes reflects fair market value.

Telstra chief, Vicki Brady

Telstra previously argued that the combined cost for the sector should be closer to A$3.9 billion. Independent analysis commissioned by the company found that the regulator’s revised proposal could exceed market value estimates by more than double and increase total industry costs by around A$4.1 billion.

Brady said higher spectrum costs could force difficult choices for the company as it balances investment in technologies such as 5G and satellite messaging with competitive consumer pricing and returns expected by investors. Telstra counts many Australian superannuation funds among its shareholders, meaning any impact on profitability could also affect retirement savings.

She added that the company would need to weigh a number of trade-offs if spectrum costs remain at the proposed levels, although the regulatory process is still ongoing.

Financial projections released last month suggest Telstra could face higher capital expenditure between 2028 and 2033 as licences come up for renewal. One of the largest payments is expected in 2030, when the company may need to allocate around A$1.28 billion. Telstra typically spends about A$3.3 billion annually on capital investment, meaning the licence costs would likely come from that existing budget.

Research commissioned by Telstra suggests higher spectrum prices could also influence network performance. Analysis of more than 230 global telecom operators found that a 10 per cent increase in spectrum costs was associated with download speeds falling by roughly 8 per cent and 5G coverage declining by about 6 per cent.

Although Telstra holds the largest share of spectrum licences and therefore faces the highest overall cost, the fees represent around 10 per cent of its revenue. Smaller operators typically pay a proportion that is roughly twice as large relative to their earnings.

Berroeta said many overseas regulators are increasingly moving away from auction models that prioritise maximising government revenue. Instead, some countries are linking spectrum renewals to commitments for broader network coverage and infrastructure upgrades.

Examples cited include Portugal, which renewed key mobile spectrum licences for up to 15 years without charging operators in 2016 and 2021, provided companies expanded coverage in underserved regions. In the United Kingdom, regulator Ofcom set renewal prices around 60 per cent lower for low-band spectrum and about 30 to 40 per cent lower for mid-band spectrum compared with the levels currently proposed in Australia.

France renewed certain spectrum licences in 2018 without fees after operators agreed to accelerate nationwide 4G deployment and improve coverage quality. Spain later changed its legislation in 2022 to allow operators to extend existing licences by up to 10 years without upfront payment, aiming to encourage investment.

The debate over spectrum pricing has also been linked to public safety concerns. Following several high-profile triple-0 service disruptions over the past year, Berroeta said reducing spectrum costs could free up additional funding for improving network resilience and strengthening the emergency calling system.

He added that the current triple-0 framework requires broader modernisation because it still depends heavily on voice infrastructure, while most mobile networks today are increasingly built around data services. According to Berroeta, the cost burden of spectrum licences slows the industry’s ability to invest in upgrades to critical communications systems that support emergency services.