AT&T’s Best Bet to Catch 5G Rivals Begins With Airwaves Auction
(Bloomberg) -- AT&T Inc. gets a chance to close a 5G airwaves gap with its rivals this week, as bidding begins in a U.S. auction of frequencies for ultrafast wireless service that’s expected to attract $25 billion in bids.
The third-largest U.S. wireless carrier is predicted to be the top bidder in the sale run by the Federal Communications Commission, according to a survey of 10 analysts compiled by Bloomberg. Mobile leaders Verizon Communications Inc. and T-Mobile US Inc. are also ready to take part in the sale that starts Tuesday, as is Dish Network Corp.
The airwaves are useful for the 5G services that will link vehicles, homes, automated factories and billions of wireless devices. A sale of similar airwaves earlier this year reached a record $81 billion in bids, showing surprisingly strong demand for such frequencies. The auction commencing Tuesday could fetch bids totaling about $25 billion, according to an average of the analysts’ estimates.
FCC auctions can take several days or even a few months. Companies participating in FCC auctions typically don’t discuss tactics or goals for fear of violating rules aimed at preventing collusion among bidders. AT&T, Verizon and T-Mobile didn’t respond to emailed queries, and Dish declined to comment.
The sale comes as AT&T tries to reorient itself toward 5G mobile services and fiber-delivered broadband, and away from the $100 billion TV and media businesses it acquired under previous management. With the spinoff of DirecTV and the pending separation of its WarnerMedia business, Chief Executive Officer John Stankey has vowed to return the phone giant to its roots as a network operator.
AT&T is expected to spend about $10 billion, according to the analysts surveyed.
The airwaves being sold are in the 3.45 gigahertz to 3.55 gigahertz range, and are known as midband frequencies. They can carry rich information streams rapidly, and over distances. That makes them ideal for 5G’s data-intensive services.
Right now AT&T’s competitors have more of the coveted frequencies.
T-Mobile gained an industry-leading cache of mid-band airwaves by acquiring Sprint Corp. last year. Verizon purchased a large chunk by spending $53 billion at the last auction. AT&T spent $27 billion during that sale.
Verizon, wary of taking on more debt to finance its bidding, may sit out the auction, New Street Research analyst Jonathan Chaplin wrote in a note.
Dish, an energetic participant in past FCC auctions, could spend more than $3 billion as it works to build a mobile network, Chaplin said. The company led by Charlie Ergen says it is pivoting away from satellite television, and toward selling 5G broadband service.
Bidding needs to top $14.8 billion to reimburse the government for costs to move some of its wireless services out of the airwaves being sold, in order to avoid interference.
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