WASHINGTON-It’s still a low-numbers game as the second week of the D-, E- and F-block personal communications services auction winds down, and there still aren’t many surprises to report. However, no markets are going for less than $1,000, as of the end of Round 8; net revenues at that point totaled nearly $462.3 million.
One auction watcher doesn’t think this sale of 10-megahertz licenses will bring in more than $1 billion, and “that won’t be because the money has run out; it will be because the competition ended.”
“What if they gave an auction and nobody came,” said analyst Taylor Simmons of Washington, D.C.-based Simmons Associates. “NextWave must be thinking they paid too much for their C-block licenses. No wonder Merrill Lynch decided to postpone their initial public offering.” Simmons also thinks that many bidders who designated only the F-block may end up kicking themselves because of the lower prices D- and E-block markets are experiencing right now. But despite conventional wisdom that says bidders are betting much more conservatively this time around, Simmons said, “The spin-meisters will tell you that it’s still early.”
Looking at the bidding trends at this point in time, Simmons believes the auction could be over in less than 25 rounds. That does not mean 25 bidding days, however. The Federal Communications Commission has been putting out feelers as to whether it is time to go to two rounds per day. While this would kick the procedure into a higher gear, it would put more pressure on those who are bidding on all three blocks.
Some of the highest bids during Round 8 went to: Norwich Communications Inc. ($45 million each for the D- and E-block New York City licenses), Sprintcom Inc. ($13.57 million for the D-block Chicago license and $12.65 million for the E-block license; $1.5 million for the D-block Memphis license; $1.2 million for the D-block Jacksonville, Fla., market), Telecorp Holding Corp. ($6.8 million for the Chicago F-block license), Devon Mobile Communications L.P. ($1.92 million for the D-block San Francisco license), West Coast PCS L.L.C. ($1.99 million for the E-block San Francisco license) and PowerTel Inc. ($4.19 million for the Atlanta D-block license).
Other Round 8 high rollers included: Rivgam Communicators L.L.C. ($2.31 million for the Boston D-block license and $1.26 million for the Baltimore D-block license), BellSouth Wireless Inc. ($3.1 million for the D-block and $3.1 million for the E-block Tampa-St. Petersburg-Clearwater, Fla., license; $1 million for the D-block Orlando, Fla., license), North Coast Operating Co. Inc. ($2 million for the F-block Miami license), Western PCS BTA I Corp. ($1.3 million for the E-block Seattle license, beating out Touch America Inc. by $1; and $1.2 million for the E-block Sunbury-Shamokin, Pa., license) and Puerto Rico Telephone Co. ($8 million for the E-block San Juan license).
No bidders have dropped out of the auction, although there have been significant drops in eligibility. No one entity really has dominated the bidding thus far, although AT&T Wireless PCS Inc. clearly was the most aggressive during Round 8. The company placed high bids on 59 markets in the D and E blocks, including its daily high for the E-block St. Louis license ($828,000).
