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Telecom Companies Just Spent $81 Billion on 5G Spectrum. Here's What Verizon, AT&T, and T-Mobile Bought. -- Barrons.comDow Jones By Nicholas Jasinski The winning bidders in a record-breaking auction of licenses for wireless spectrum were revealed on Wednesday, and Verizon Communications took the lion's share. Telecom companies bid a combined $81 billion on frequencies in the so-called C-Band that will be particularly useful for their next-generation 5G networks. Verizon (ticker: VZ) spent $45.5 billion of the total haul, followed by $23.4 billion by AT&T (T) and $9.3 billion by T-Mobile US (TMUS). It will cost the winning bidders another $14 billion to clear the spectrum for use by wireless companies. It is currently occupied by satellite companies such as the bankrupt Intelsat. The auction -- run by the Federal Communications Commission -- began on Dec. 8 with bidding ending in January. It included two categories of licenses, which will become available in late 2021 and late 2023. The licenses cover about 280 megahertz of spectrum falling between 3.3 GHz and 4.2 GHz. That counts as mid-band spectrum, which offers an attractive trade-off between connection speed and range. Higher-frequency signals allow for faster connectivity, but don't travel far from an antenna. Low-band spectrum has the opposite trade-off: It allows carriers to blanket a large geographic area with service from relatively few antennas, but without the lightning-fast speeds that 5G promises. Wireless companies effectively need to have licenses in all three categories to boast a fully developed 5G network, with high-band coverage in dense urban areas and places like stadiums or airports and mid- and low-band filling in the gaps in suburban and rural areas in the rest of the country. Verizon claimed 3,511 of 5,684 licenses up for grabs, which give companies the rights to broadcast over a given frequency band in a geographic area. The company spent an average of $13 million per license, suggesting a mix of coverage in urban, suburban, and rural areas. So far, Verizon had bet big on high-frequency spectrum commonly referred to as millimeter wave, or mmWave. T-Mobile has the industry's most complete spectrum portfolio, largely thanks to an abundance of mid-band licenses secured in its 2020 acquisition of Sprint. It focused on more in-demand licenses in the auction, spending an average of $66 million for its 142 licenses. AT&T's existing spectrum portfolio is somewhere between those of its two rivals. It spent $14 million on average for 1,621 licenses. "Based on the C-Band results, Verizon and AT&T are the big winners; they have narrowed the gap with T-Mobile (though most of this spectrum is only available in three years; that is a long time to be at a disadvantage)," wrote New Street analyst Jonathan Chaplin on Wednesday. T-Mobile stock was the biggest winner in after-hours trading on Wednesday, however, rising about 5%. Investors are clearly confident in the company's existing spectrum portfolio, and were glad to see it didn't overspend. AT&T and Verizon shares were both down less than 1% in late trading. No other bidder came close to the big three wireless companies. United States Cellular (USM) spent $1.3 billion on 254 licenses, or about $5 million on average. The fifth-highest total bidder was private-equity firm Grain Management, which bought just 10 highly valued licenses for $1.3 billion. Remaining bidders spent less than $400 million combined. Investors were also watching whether Dish Network (DISH), Charter Communications (CHTR), or Comcast (CMCSA) would be notable bidders, but none of them made a splash. The satellite-TV provider Dish already has a portfolio of wireless spectrum licenses, and plans to build a nationwide 5G network in the coming years. It spent less than $3 million in the C-Band auction. The cable companies have growing mobile-phone businesses that operate largely on networks owned by the big three wireless companies. |
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