AT&T spent $9B on midband spectrum for 5G – analysts

Two separate financial analyst firms predict that AT&T was the big winner in the FCC's recent auction of midband spectrum. And both firms believe the carrier spent around $9 billion on spectrum licenses in the auction.

If AT&T did indeed spend $9 billion, it would cap an expensive year for the company. AT&T already spent a total of around $27.7 billion on C-band spectrum licenses earlier this year.

Figure 1: (Source: Robert K. Chin - Storefronts/Alamy Stock Photo)

Thus, if the analysts' predictions are accurate, AT&T over the course of 2021 may end up spending a total of $36.7 billion on midband spectrum licenses. That's just under half of the $85 billion AT&T spent to acquire Time Warner in 2018.

Importantly, all that spending ought to give AT&T access to a wide swatch of midband spectrum, which the operator can use to improve the speed and performance of its growing 5G network. Such spectrum has been described as ideal for 5G.

However, the FCC has not yet identified the winning bidders of its recent auction of midband spectrum licenses between 3.45GHz and 3.55GHz, an auction the agency has dubbed Auction 110. The auction ended earlier this week with around $21.9 billion in winning bids. The FCC is expected to release the identity of the winners of the auction sometime in December, or possibly January.

Light Reading has dubbed Auction 110 as the "Andromeda auction" because it sounds cool.

"We still believe AT&T will be the highest bidder in Auction 110 (~$9 billion), followed by a steep drop-off to Verizon (~$5 billion), and then again to Dish Network and T-Mobile (~$2 billion each)," wrote the financial analysts at Raymond James in a note to investors this week.

However, they noted that Dish might end up spending more than $2 billion given its recent $5.25 billion in fundraising.

"We expect AT&T spent nearly $9 billion," agreed the financial analysts at New Street Research in a recent note to investors. They added that T-Mobile likely walked away with $8 billion in licenses, and Dish may have spent between $4 billion and $6 billion.

However, the New Street analysts speculated that there's a "slim chance" that T-Mobile won nothing and that Verizon spent heavily in the auction. But they said that would be a "big surprise."

After all, Verizon spent close to $50 billion on midband spectrum licenses earlier this year in the FCC's C-band auction of midband spectrum for 5G. But it's worth noting that those licenses are now tangled up in a squabble over interference concerns between the FCC and the Federal Aviation Administration (FAA).

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— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano