The third week of the advanced wireless spectrum auction showed significant slowing in bidding action. Nevertheless, it appears the Sprint Nextel Corp.-cable joint venture is aiming to build a broad footprint of 20-megahertz B-block licenses.
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The auction ended the week having raised a total gross amount of $13.75 billion; roughly half that sum came from the coveted-and expensive-regional licenses.
The bidding continued to wind down on Friday, with an average of 63 new bids per round for the last three rounds of the week. Only 110 of the 168 eligible bidders remain. NextWave Telecom Inc. and Dobson Communications Co. were the two most active bidders as the week came to a close.
In round 73, NextWave’s bidding entity placed 13 new high bids on spectrum in parts of Ohio, Pennsylvania, Texas and Illinois. NextWave currently holds high bids on a total of 162 licenses, for which it has bid $119 million. NextWave continued to hold the honor of being the bidder that has won the most licenses, although the permits cover only about 69 million people. Dobson, meanwhile, placed nine high bids on licenses in Kentucky, Oklahoma, Ohio, Texas and Virginia. The regional carrier has high bids for 82 licenses totaling $54.4 million.
Leap Wireless International Inc. picked up another six high bids on spectrum in the latest round of bidding, and to date has bid $690 million for 94 licenses; in addition, Leap-backed Denali Spectrum has an unchallenged high bid of $365 million on a Great Lakes regional 10-megahertz license.
The joint venture between Sprint Nextel Corp. and several cable companies added a pair of high bids in round 73, for total high bids of $2.3 billion on 133 licenses. Those licenses are mostly in the B-block and essentially give the JV a national footprint covering about 264 million pops.
T-Mobile USA Inc. held its place as the top bidder of the auction, having committed roughly $4.2 billion for spectrum covering 473 million potential customers; the company that was expected to be an aggressive bidder, and according to Raymond James analyst Ric Prentiss, seems to have won enough spectrum to put itself in a good position for launching a 3G network.
“But of course, the $4 billion in spectrum fees is just the beginning, as additional money will be required to fund the capital and operating expenditures associated with deploying a 3G network and selling 3G products,” Prentiss wrote in a report summarizing the auction.
According to the Raymond James report, T-Mobile USA has spent an average of 63 cents per-MHz-per-pop, while Verizon Wireless has been paying about 74 cents per-MHz-per-pop. Cingular Wireless L.L.C. has been bidding about 54 cents per-MHz-per-pop on average, while the Sprint Nextel/cable JV has averaged about 45 cents per-MHz-per-pop.
Analysts reported that prices during the week averaged between 52 and 54 cents per MHz-per-pop, but some spectrum is certainly coming more cheaply. Among the new bids received in round 73, a sampling of prices per-MHz-per-pop show:
- Leap offered 31 cents per-MHz-per-pop for Trenton, N.J.
- The Sprint Nextel-cable JV bid 11 cents per-MHz-per-pop for spectrum in Savannah, Ga.
- Dobson placed a high bid for a C-block license covering Syracuse, N.Y., with an offer of 22 cents per-MHz-per-pop.
- NextWave put up a bid of 12 cents per-MHz-per-pop for the 537,000 customers in Lake Charles, La.
Only 67 of the 1,122 licenses have not received bids. The Federal Communications Commission plans to move the bidding up to eight rounds per day starting this week.
“We expect minimal changes at this point, and the auction could be over in the next two weeks,” wrote Bear Stearns analyst Phil Cusick in a research report.
