[ad_1]
Federal Communications Commission current sale of wireless licenses has reached over $ 69.8 billion after three weeks of competitive bidding, a record amount that could alter prospects for mobile carriers for the next decade .
Proceeds from the auction have already exceeded the $ 44.9 billion raised in 2015 from an earlier sale of mid-range cellular licenses, which US mobile carriers were using at the time to improve their 4G service. These companies are now investing billions of dollars in the next wave of fifth generation coverage. The 5G standard promises to speed up the flow of data to phones and other wireless devices such as personal computers, cars and industrial machinery.
Recent offers have beaten Wall Street’s highest forecast, suggesting that several companies are vying for the most valuable wireless rights. The 5G auction started on December 8 and will end for the holidays until January 4, when total bids could rise further.
Each bid is kept secret until the auction process is complete. Analysts expect big names like AT&T Inc.
and Verizon Communications Inc.
to come away with a significant portion of the licenses corresponding to the assets that rival T-Mobile US Inc. captured with its takeover of Sprint in February.
“The mid-band spectrum will be where 5G lives,” said Walt Piecyk, telecom analyst for research firm LightShed Partners. He added that T-Mobile’s merger with Sprint “has clearly put pressure on Verizon and AT&T” to match their rival’s war chest.
“When the numbers get this high, you have to assume that everyone is getting more aggressive,” Piecyk said.
Mobile service providers are also launching offers against investment firms and new market entrants. Dish Network satellite provider Corp.
won numerous licenses auctioned in 2015. The company this month raised more cash with a $ 2 billion convertible note offering to help fund more investment in the network. Dish is building its own mobile phone network after purchasing assets and approximately 8 million customers from Sprint.
Cable Internet providers could also influence the outcome of the auction after years of experimentation with wireless services. Comcast Corp.
and communications charter Inc.
teamed up to participate in the ongoing auction after spending nearly $ 1 billion on a smaller license sale earlier this year.
The proposed radio frequencies range from 3.7 to 4 gigahertz, an intermediate range considered well suited to 5G service. New 5G smartphones can already connect to these frequencies in other countries that have wiped out the spectrum. The United States also sells large chunks of spectrum at a time, which increases their value.
High bids benefit the US Treasury, which will collect a windfall once the winners pay for their licenses. The winners will also have to spend at least an additional $ 13 billion to help modify equipment for a group of satellite companies that are already using the frequencies. Satellite operators have agreed to a plan from the FCC that shifts their television broadcasts to a narrower portion of the radio spectrum known as the C band.
Mobile carriers can afford to commit to large payments given their low borrowing costs and relatively stable service revenues, said Frank Louthan, analyst at Raymond James.
“Investors consider these companies to be among the safest in the market,” said Louthan. “I don’t think a slight change in the debt ratio would make a big difference.”
The FCC will not reveal the auction winners for several days after the auction ends, meaning the wider telecommunications industry could remain on hold until February. Federal rules against coordinated auctions also limit what auction participants can say about the process, limiting their ability to raise capital or discuss major spectrum transactions.
Write to Drew FitzGerald at [email protected]
Copyright © 2020 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8
[ad_2]
Source link