WASHINGTON-With the number of new bids and new high bids dwindling down to nearly zero, the first sale of 986 local multipoint distribution services licenses may be over today. However, with some 128 B-block licenses languishing without so much as a minimum bid offer, the Federal Communications Commission plans to schedule another auction of these properties, perhaps at reduced minimum bids.
While it was thought that the LMDS auction would have ended Friday, Mike Hunter of Lukas, Nace, Gutierrez & Sachs, said, “Usually, when it gets down to one or two bids per round, people start using waivers.” There probably will be no surprises as to the auction’s big winners, because most markets have been sewn up for some time.
“The big surprise was how cheap this auction was, and prices will go down even more in future auctions,” Hunter said. “This was a good deal for bidders, and those who participate in the next auction [Phase II 220 MHz] will gain.”
The FCC may decide to set minimum bids lower, “now that the market has spoken,” he added.
Hunter, who follows auctions for the law firm, doesn’t anticipate any problems with winning bidders making their payments, in part because they paid less for them. Where there will be some controversy during the public-notice stage when petitions to deny could be cast regarding the FCC’s assets vs. revenues stance when it comes to what companies can qualify for bidding discounts.
“It will be interesting to see how this plays out,” Hunter said. “Forty-five percent is a huge savings, and some of the companies that qualified for this are rolling in dough but they have no assets.”
Analyst Taylor Simmons of Washington, D.C.-based Simmons Associates thought a move made by Top 10 LMDS player Baker Creek Communications Inc. during Round 99 last Thursday was interesting. Of the four high bids submitted during that round, one was from that bidder, which “apparently got paranoid and raised its own high bid for Sacramento-B by $80,000,” he said.
Results for Round 103 had net revenues reaching $575.1 million; eight new bids and seven new high bids were submitted. While WNP Communications Inc. continues to hold the lead in money committed ($186.8 million on 40 properties), Baker Creek has spent $26.3 million on 233 licenses, eclipsing all other bidders. Nextband Communications L.L.C. has spent $136 million for 44 licenses, including the Los Angeles A block, the New York City B block, the Chicago B block, the San Francisco B block, the Detroit B block and the Boston B block. WinStar LMDS L.L.C. has 13 licenses at $42 million; Cortelyou Communications Corp., 15 licenses for $25 million; BTA Associates, seven licenses at $16.9 million; Alta Wireless Inc., four licenses at $15 million; Eclipse Communications Corp., 48 licenses for $12.6 million; CoServ L.L.C., six licenses for $10 million; and U S West Communications Inc., $9.9 million for eight licenses.
