Verizon's Spectrum Auction: Winners & Losers

Verizon Wireless 's offer to sell its 700MHz A and B blocks could be good news for T-Mobile US Inc. and Verizon's cable partners, but bad tidings for Sprint Corp. (NYSE: S) and Dish Network LLC (Nasdaq: DISH). (See Verizon Will Sell Spectrum If It Seals AWS Deals.)

The proposed spectrum sale is contingent on Verizon closing its proposed acquisition of Advanced Wireless Services (AWS) spectrum from Leap Wireless International Inc. (Nasdaq: LEAP) and four MSOs: Comcast Corp. (Nasdaq: CMCSA, CMCSK), Time Warner Cable Inc. (NYSE: TWC), Bright House Networks and Cox Communications Inc.

Sanford C. Bernstein & Co. Inc. analyst Craig Moffett believes the proposal bodes well for Verizon Wireless and its cable partners in part because it implies that the Federal Communications Commission (FCC) and Antitrust Division of the U.S. Department of Justice are about to wrap up their review of the AWS deals and apply some conditions that Verizon Wireless can apparently live with.

"A carrier does not just wake up one day and decide to sell some of the best spectrum it has at a time when it argues the industry is facing a spectrum crunch," he writes. Importantly, he adds, this could mark the start of a new national policy that applies spectrum caps on Verizon Wireless, AT&T Inc. (NYSE: T) and other wireless carriers.

Moffett estimates that Verizon's "weighted average spectrum depth on a national basis" would be roughly 107MHz, but fall just below the 100MHz ceiling if it were to sell its A and B blocks.

Update: Here's a graph from the research firm comparing the spectrum holdings of top U.S. carriers.

Here's how Moffett sizes up the winners and losers if Verizon Wireless is allowed to proceed.

Winners

Dish: If a spectrum cap in the neighborhood of 100MHz is imposed, any hopes of a quick sale of Dish's 40MHz of S-band spectrum to AT&T could be dashed, as AT&T currently holds 87.7MHz of spectrum on average, post the T-Mobile breakup. Moffett also isn't confident that Dish will be able to sell part of its holdings to AT&T because the satellite TV giant would still be on the hook to build a wireless network, which could scare investors. (See FCC Keeps Dish Spectrum Plan Alive .)

— Jeff Baumgartner, Site Editor, Light Reading Cable

Like what we have to say? Click here to sign up to our daily newsletter

(0)  | 

Comment  | 

Print  | 

RSS