The $35 billion-plus price tag for the FCC's ongoing AWS-3 spectrum auction caused Citigroup to downgrade its rating for Verizon Monday. The same firm upgraded satellite TV player Dish last Friday because of its existing holdings of similar mid-band radio waves.
Citigroup analyst Michael Rollins downgraded Verizon Communications Inc. (NYSE: VZ), one of the bidders in the auction, from a "buy" rating to neutral Monday morning, citing the high costs of the current spectrum auction for the operator and increased competition.
The Advanced Wireless Services (AWS-3) sell-off -- known as Auction 97 -- stands at $35.1 billion bid after 29 rounds this Monday. The Federal Communications Commission (FCC) had set the minimum reserve for bids at $10.1 billion, which the 70 bidders for the spectrum blew through early last week. (See FCC's AWS-3 Auction Tops $14B.)
The FCC started the current auction on November 13. The AWS-3 auction includes 65MHz of spectrum in the 1.7GHz and 2.1GHz bands, including 50MHz of paired channels for LTE uplink and downlink. Most of the bidding so far has been around the 50MHz of paired spectrum. (See this FCC page for more details on the spectrum that is up for grabs.)
The Citigroup analyst raised his target price to 94 cents from 79 cents for Dish Network LLC (Nasdaq: DISH)'s stock on Friday.
The much higher than expected bidding for AWS-3 raises the value of Dish's current mid-band holdings. The US satellite provider holds 50MHz of spectrum: 40MHz in the AWS-4 (2/2.2GHz) band and 10MHz in the adjacent 1.9GHz H-Band. The H-Band could potentially be paired with AWS-4 for an uplink and downlink channel.
Winning some of the AWS-3 spectrum would give Dish more bandwidth to interoperate with LTE services on the AWS-1 (1.7/2.1GHz) spectrum and potentially work with its AWS-4 spectrum in the future.
Dish is a bidder in the current auction, along with AWS spectrum holder T-Mobile US Inc. , Verizon and others. (See AWS Auction: Could It Bring Dish & T-Mobile Together?)
— Dan Jones, Mobile Editor, Light Reading