5G auction records record as auction exceeds $ 69 billion

The ongoing sale of the Federal Communications Commission’s wireless licenses earned more than $ 69.8 billion after three weeks of auctioning, a record amount that could change the outlook for mobile operators for the next decade.

Auction revenues have already exceeded $ 44.9 billion raised in 2015 through a previous sale of medium-sized mobile licenses, which US mobile operators used 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, industrial machines and machines.

Recent offers have surpassed the highest forecasts on Wall Street, suggesting that more companies are fighting for the most valuable wireless rights. The 5G auction started on December 8 and will be interrupted for the holidays until January 4, when the total bids could move even further.

Each bid is covered in secret until the end of the bidding process. Analysts expect big names like AT&T Inc.

and Verizon Communications Inc.

to move away with much of the licenses to match the assets that rival T-Mobile US Inc. he captured them with Sprint in February.

“The average bandwidth spectrum will be where 5G lives,” said Walt Piecyk, a telecom analyst for research firm LightShed Partners. He added that T-Mobile’s merger with Sprint “clearly put pressure on Verizon and AT&T” to match their rival’s war chest.

“When the numbers get so high, you have to assume that everyone gets more aggressive,” Mr Piecyk said.

Mobile service providers are also bidding against investment firms and new market entrants. Dish Network satellite provider Body.

won many of the licenses sold in the 2015 auction. This month, the company raised more money through a $ 2 billion offer of convertible tickets to help fund more network investments. Dish is building its own mobile phone network after buying assets and about 8 million Sprint customers.

Wired internet providers could also influence the auction result after years of experience with wireless services. Comcast Body.

and Charter Communications Inc.

they teamed up to bid in the current auction after spending nearly $ 1 billion on a lower license sale earlier this year.

The radio frequencies offered range from 3.7 to 4 GHz, a mid-range range considered suitable for 5G service. The new 5G smartphones can already connect to those frequencies in other countries that have eliminated the spectrum. The US also sells large chunks of spectrum simultaneously, increasing their value.

Big offers benefit the US Treasury, which will collect a huge discount after the winners pay their licenses. The winners will also have to spend at least $ 13 billion more to help change the equipment for a group of satellite companies that already use the frequencies. Satellite operators have agreed to an FCC plan that moves its TV broadcasts to a narrower portion of the radio spectrum known as C-band.

Mobile operators can afford to commit to large payments, given their low borrowing costs and relatively stable service revenues, said Raymond James analyst Frank Louthan.

“Investors see these companies as some of the safest around them,” Louthan said. “I don’t think a slight change in the debt ratio would make a big difference.”

The FCC will not disclose the winners of the auction for a few days after the auction ends, which means that the wider telecommunications industry could remain in suspense until February. Federal anti-coordinated auction rules also limit what auction participants can say about the process, limiting their ability to raise capital or discuss major transactions involving the spectrum.

Write to Drew FitzGerald at [email protected]

Copyright © 2020 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8