Among card players, an "overcall" is when one player makes a higher bid than an opponent's bid.
That strategy may be at the heart of T-Mobile's C-band spectrum auction activities, at least according to one financial analyst firm.
In a note to investors issued Monday, the analysts at MoffettNathanson noted that bidding during the FCC's ongoing C-band spectrum auction hit two major inflection points, once on December 16 and another on December 21. "It seems fairly clear that a major bidder dropped out, or at least sharply dropped off, at each of those two points," they wrote.
Verizon, AT&T, Comcast/Charter, T-Mobile and Dish Network are among the big companies registered to bid in the FCC's auction. However, the agency is not releasing the identities of the entities placing bids during the auction, only the amount of the bid.
"While we obviously can't say for sure, we might guess that those two bidders [that dropped out] are T-Mobile and AT&T," the analysts wrote.
Specifically, the MoffettNathanson analysts speculated that T-Mobile "succeeded in forcing competitors to pay far more than originally anticipated. That could hamstring competitors (e.g., Verizon) with respect to both future capital investment and future pricing."
Indeed, T-Mobile executives may have provided a peek at their bidding strategy in September, prior to the start of the auction.
"I think AT&T and Verizon will absolutely kill each other over C-band," T-Mobile CEO Mike Sievert said during an investor event last year. "I think they're going to spend tens of billions of dollars they don't have to stress out their balance sheets and put at risk their share buyback and dividend plans in order to not be left out of the party on 5G. Because they're stuck. They got themselves stuck. And they're way behind [in spectrum ownership] and they can't stand it. So they're going to have to do things that are probably going to be uneconomical."
In fact, AT&T and Verizon both argued last year that T-Mobile should be prohibited from purchasing more valuable midband spectrum.
Billions of dollars an hour
The FCC's C-band spectrum auction has dramatically surpassed even the most aggressive forecasts; when bidding resumed Monday after a holiday break, the total amount of gross proceeds in the event reached a staggering $76.5 billion. That's roughly double analysts' high-end estimates, and triple the general consensus.
Incredibly, there's no telling how much higher it will go. During five rounds of bidding action on Monday – totalling just two and a half hours – bidders collectively added almost $7 billion to the auction's total. Such eye-watering prices likely indicate that T-Mobile and AT&T haven't completely exited the event. However, they may have shifted their interest toward B and C Block licenses (which will become available in 2023) rather than the more valuable A Block licenses that will become available in 2021. Further, according to Recon Analytics analyst Don Kellogg, recent auction action also has shifted away from spectrum licenses covering big US cities and onto licenses covering smaller cities.
That said, most analysts agree that the incredible demand displayed during the C-band spectrum auction likely indicates that there are few bidders on the sidelines, and most big players will likely walk away with spectrum winnings of some kind.
- Here are the new C-band auction estimates
- Will the C-band auction set up US operators for a European-sized failure?
- AT&T, Verizon team to stop T-Mobile from getting more 5G spectrum