The FCC’s spectrum aggregation order, approved Thursday, is...
The FCC’s spectrum aggregation order, approved Thursday, is highly positive for AT&T, Dish Network and Verizon, Guggenheim Partners analyst Paul Gallant said Friday in a research note. “Right at the end of the proceeding, Verizon’s and AT&T’s spectrum buying opportunity…
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went from good to very good,” Gallant said. That makes a buy of Dish more plausible, he said. “Raising the spectrum screen from 151 MHz to around 190-200 MHz should greatly reduce one major objection to a merger: that AT&T or Verizon would have too much spectrum if they acquired Dish,” Gallant wrote. “For example, Verizon currently has an average of 102 MHz per market. Adding Dish’s 56 MHz would have put Verizon well over the old 151 MHz cap in some markets but would put Verizon well under the new screen of 190-200 MHz. Being below cap increases the deal approval prospects but does not guarantee it -- FCC will still examine competitive effects of all spectrum deals.” The rules are “less helpful” to T-Mobile and Sprint but probably raise the likelihood of a successful incentive auction, the note said. The rules mean Verizon and AT&T “will be able to secure meaningful low-band spectrum” in the incentive auction, UBS said Friday. “We remain neutral on wireless amid rising competition, with [T-Mobile] our only Buy in the segment due to strong sub momentum, conservative valuation, and potential as a takeout target,” UBS said. The spectrum aggregation rules make an AT&T or Verizon buy of Dish more likely, but a Sprint/T-Mobile merger more difficult, said New Street Research in a Friday note. “Sprint is at or above the screen in most markets,” the form said. “As such, a transaction with [T-Mobile] would trigger enhanced scrutiny and significant spectrum divestitures would likely be required.” The incentive auction order “represents a significant step toward implementing a ‘win-win’ for consumers and the U.S. economy,” said CTIA President Steve Largent. “This historic effort has the potential to unleash vital spectrum to meet ever-increasing consumer demand for mobile broadband services, spur investment and innovation and maintain our global leadership in mobile broadband. As a result of the Commission’s and Congress’ hard work, American consumers and businesses will benefit from a new generation of wireless services and offerings built on the foundation of new mobile broadband spectrum.”