FCC spectrum auction ends, raises record $44.9 billion

Reuters News
Posted: Jan 29, 2015 12:27 PM

By Alina Selyukh and Malathi Nayak

WASHINGTON (Reuters) - The U.S. Federal Communications Commission raised a record-breaking $44.9 billion in the auction of so-called AWS-3 airwaves that closed on Thursday, far surpassing the expectations of experts and industry analysts.

Regulators will disclose the winners of the auctioned spectrum licenses in the coming days. Major bidders included wireless carriers Verizon Communications Inc, AT&T Inc and T-Mobile US Inc as well as satellite TV provider Dish Network Corp.

The auction - wireless carriers' largest opportunity to get access to new airwaves since 2008 - began on Nov. 13. The wave of bids soared past the reserve price of $10.1 billion in the first week and boosted Dish's share price to an all-time high as investors watched for the auction to crystallize the value of the company's spectrum holdings.

The result reflects wireless carriers' urgency to satisfy the growing consumer demand for streaming video and other data-guzzling applications.

It also sets a high bar for what is expected to be the largest and most complicated U.S. airwaves auction of low-band frequencies yet, planned by the FCC for mid-2016.

Canada's government plans to auction off similar high-frequency AWS-3 airwaves beginning on March 3.

Investors have worried that carriers such as AT&T and Verizon may have overspent in the auction. But analysts argue that more spectrum will help carriers expand their network capacity as they tackle intense competition in the near saturated wireless market.

"AT&T and Verizon urgently need more capacity ... between them they have got 73 percent of industry revenues and about 43 percent of the industry's capacity," said Jonathan Chaplin, an analyst at New Street Research.

Based on their debt-raising patterns, AT&T may have purchased more than Verizon, Chaplin added. He expects AT&T to pay between $20 billion to $22 billion and Verizon to spend in the range of $14 billion to $16 billion in the auction.

AT&T is awaiting regulatory approval for its proposal to buy satellite TV company DirecTV for $48.5 billion.

Sprint Corp, which does not own AWS-3 spectrum but controls a vast stock of other lower-priced bands, did not partake in the auction.

Dish has spent $10.5 billion on spectrum since 2008, but its true market value is uncertain because it takes government auctions such as this to set a formal benchmark.

Shares in Dish were up 1.9 percent at $72.91 on Thursday afternoon. AT&T and Verizon shares were relatively unchanged at $32.80 and $46.06, respectively.

(Reporting by Alina Selyukh in Washington D.C. and Malathi Nayak in San Francisco; editing by G Crosse)