OVERLAND PARK, KAN.—Sprint is sitting out the upcoming TV incentive spectrum auction. Marcelo Claure, CEO of the nation’s No. 4 carrier made the announcement on Saturday.
“After thorough analysis, [Sprint] announced today that it will not participate in the 600 MHz incentive auction. Sprint has concluded that its rich spectrum holdings are sufficient to provide its current and future customers great network coverage and be able to provide the consistent reliability, capacity, and speed that its customers demand.”
Sprint also sat out last year’s AWS-3 auction, which raised around $45 billion and ignited new interest in the TV spectrum incentive auction, scheduled for March 29, 2016. When Sprint pulled out of the AWS-3 auction, a spokesman for the company told Bloomberg it would “evaluate the opportunities presented by the upcoming 600 MHz incentive auction.”
Sprint already has around 150 MHz of AWS (advanced wireless service) spectrum in the 2 GHz band. That spectrum is particularly useful for cellular communications because the high frequencies are compatible with the type of small antennas housed in cellphones. When the AWS-3 auction concluded, the value of Sprint’s 2 GHz spectrum was estimated to be $115.1 billion, or 1.4 times the company’s enterprise value, according to Larry Darrell at BidnessEtc. Sprint also was hemorrhaging money at the time, so there was some speculation about it selling some of its 2 GHz licenses. Claure said that wasn’t necessarily the case.
“We’re always running different analysis that says how much spectrum do we need, so we are always open and looking at potential offers,” he said on the company’s 3Q14 conference call. “That doesn’t mean that we’re out there marketing the sale of our spectrum.”
Sprint has since cut its losses—from $224 million in the first quarter of 2015 to $20 million in the most recent quarter—and Claure signaled that the carrier intends to develop its spectrum.
“Sprint has started a major effort to increase coverage and capacity by densifying its network and increasing the number of cell sites using its existing spectrum,” he said. “Sprint is already deploying new technologies, such as carrier aggregation, that unlock the potential of its strong 2.5 GHz spectrum position. The company has seen positive results from its infrastructure upgrades in key U.S. markets, as RootMetrics surveys increasingly show. Sprint is laser-focused on building on that progress and is steadfast in its mission to have a world-class network for consumers and businesses.”
With regard to what impact Sprint’s nonparticipation will have on the auction, Preston Padden, head of the Economic Opportunities for Broadcasters Coalition, (which disbanded this morning) said Sprint’s exit would have “zero” impact.
FCC Commissioner Ajit Pai disagreed. Pai opposed setting aside a “reserve” amount of spectrum in the incentive auction for carriers other than Verizon and AT&T, the nation’s No. 1 and 2 carriers respectively.
“Sprint’s decision not to participate in the incentive auction highlights the folly of the FCC’s attempt to pick winners and losers before the auction begins,” he said in a statement. “It also intensifies doubts about how competitive the bidding will be for set-aside spectrum and whether American taxpayers will receive fair compensation for that scarce public resource. Sprint’s announcement only strengthens my belief that the FCC should not have granted a spectrum giveaway in this auction or placed artificial limits on carriers’ participation.”
Marci Ryvicker of Wells Fargo also was skeptical about Sprint’s exit.
“First, we remind you that we have been begging D.C. and specifically [FCC] Chairman [Tom] Wheeler to take the wireless commentary seriously. However, it appears the proposed March 29 auction start is more or less set in stone for political reasons,” she wrote in response to Sprint’s announcement.
”In our opinion, a delay in the auction is appropriate, as it provides the FCC time to actually answer a whole host of concerns from both sides—broadcast and wireless‑and would also be economically beneficial by allowing AT&T, Dish, Verizon, Sprint, T-Mobile etc. to get their finances in gear following some major M&A and the AWS-3 spectrum auction. Our view is a delay to 2017 would be a net positive for all, especially broadcasters given wireless might be more committal and it would give us a potential catalyst in a non-presidential year.”
See John Eggerton’s coverage at B&C.
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