Telstra paid the most of all the three bidders, forking out $1.3bn for the largest chunk of 4G spectrum - in the 700 MHz band it snapped up 40 MHz (2X20 MHz) and 80 MHz (2X40 MHz ) in the 2.5 GHz band.
The high prices paid by telco's for the 4G spectrum were only "marginally" above reserve prices, Australian Communications and Media Authority said today.
Telstra wants to cover 66% of the population with next gen 4G Long Term Evolution (LTE) coverage before the end of the year, and with 2.1 m users on 4G it is pulling ahead in the 4G race.
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The spectrum licences have a term of 15 years.
Telstra CEO David Thodey said the auction result was a significant outcome for Telstra customers as it would help ensure the company remained at the forefront of mobile connectivity.
"This additional spectrum represents a major investment in the future of telecommunications in Australia and means we can continue to deliver a superior mobile experience for our customers," he said.
"The spectrum will be used to enhance our network to help support extraordinary demand growth for mobile services and data. With the 700 MHz and 2.5 GHz spectrum we will be able to deliver faster speeds, more capacity and expansive wide area coverage of 4G LTE technology on our Next G network."
The low-frequency nature of 700MHz means the mobile signal can travel relatively longer distances, which is good news for mobile coverage in rural and regional areas.
It also means better in-building coverage in metro and suburban areas, Thodey noted.
Optus paid just half Telstra's bill, coughing up $649 m for 2 x10 MHz of paired spectrum in the 700 MHz band and and 2 X 20 MHz of paired spectrum in 2.5 GHz band.
"The spectrum Optus has acquired in the 700 MHz band will provide stronger 4G coverage across both metropolitan and regional Australia, allowing it to expand Optus 4G services to more customers than ever before," the telco said today.
The additional spectrum purchased in the 2.5 GHz band, when combined with its already substantial holdings in 2.3 GHz, will enable Optus to provide "unparalleled" network capacity for 4G data services to its metro customers.
The outcome of the spectrum auction, announced today by ACMA, coined just under $2 bn for the Federal government.
TPG meanwhile paid $13.5 million for 20 MHz in the 2.5 GHz band, which was in high demand by all three bidders.
Vodafone pulled out of the auction before it began on April 23, but claims its 4G network will be faster than rivals, when it launches in June.
'The auction process itself ran smoothly and resulted in the allocation of spectrum to the companies that valued it the most,' said ACMA's Chairman Chris Chapman.
In the 2.5 GHz band, demand exceeded supply in the first round but reached equilibrium at the end of Round 3, he said.
'The auction tested the market and the auction's conclusion is another important step toward realising Australia's digital dividend."
This decades-long process of spectrum reform will be complete when the new licences in the 700 MHz band become operational at the beginning of 2015.
''By making spectrum previously required for analog television transmissions available to meet rising demand for high-speed wireless broadband, the digital dividend auction will well position the Australian telecommunications industry to deliver fast, ubiquitous and symmetrical mobile broadband connectivity to consumers and industry,' Chapman said.