Alltel Leans Against June AWS Auction Bid
Alltel likely will sit out the June FCC advanced wireless services auction, CEO Scott Ford said Wed. in a conference call with analysts on Alltel quarterly results. Ford said he questions how useful the 90 MHz of spectrum being sold would be to Alltel as it builds out its network. One byproduct of the auction is that acquisition activity in the wireless world has ground to a halt, with FCC rules limiting contact between wireless carriers going into the AWS auction.
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With national carriers Sprint Nextel, Verizon Wireless and Cingular indicating they may not bid (CD April 21 p3), Ford’s comments likely will raise more questions.
“We are leaning toward not going to this auction and are taking a hard look at those [auctions] that are scheduled to come down over the next 2 or 3 years, because that’s much better spectrum for building out networks that have voice at the core,” Ford said. Alltel has talked with other firms about auction partnerships, he said: “We have not been able to get those lined up exactly like we would all like them to get lined up.”
Licenses scarcely figure in the overall cost, Ford said. “The license is the cheapest part of the exercise. Building it is the 2nd cheapest part. You then have to put customers on the network and you have to underwrite the losses on the network. So any new buildout in the modern era is expected to be extremely expensive and this is not the best [spectrum] for looking at things like that.”
Anticollusion rules mean M&A activity has “dried up” and probably won’t pick up until the “back quarter” of 2006, Ford said.
Alltel reported mixed financial results Wed. Revenue was up nearly 20% to $2.5 billion, but net income fell 5% from the same quarter last year to $300 million. The carrier added 165,000 subscribers and reduced its churn to 2%. ARPU was up 4% over last year, at $50.90.