Sprint Could Raise Some Money by Selling Spectrum to AT&T

[marioc21]

That's the crux of this article.

 

http://www.lightreading.com/blog.asp?blog_sectionid=244&doc_id=225344

 

1:20 PM -- Sprint Nextel Corp. (NYSE: S) could make millions selling off spectrum that it can't use to fund the 4G updates tied to its "Network Vision" program.

On Wednesday, Federal Communications Commission (FCC) Chairman Julius Genachowski opened the way to allowing 4G services on the 2.3GHz Wireless Communications Services (WCS) band. AT&T Inc. (NYSE: T) will be the main beneficiary if the FCC follows the chairman's lead, as it holds the most WCS licenses. (See FCC Chairman Says Yes to WCS for 4G and AT&T to Buy NextWave for 'Alternative' 4G .)

 

I'll leave it to the spectrum experts on s4gru to state whether this spectrum would actually be valuable to ATT.

[digiblur]

I know Sprint already sold off 5mhz(paired) of the 15mhz(paired) PCS they had in the A block to AT&T a couple years ago in my area. Don't give them any ideas

[lynyrd65]

That's the crux of this article.

 

http://www.lightread...4&doc_id=225344

 

 

 

I'll leave it to the spectrum experts on s4gru to state whether this spectrum would actually be valuable to ATT.

We S4GRU people must really be ahead of the curve.

 

http://s4gru.com/ind...m-assumes-debt/

 

I wonder if Sprint is going to get a phone call next for their WCS spectrum.

 

...and this is where AT&T trading Sprint's WCS for their PCS would be useful, since Sprint otherwise is just going to sit on their WCS licenses.

[supert0nes]

Spectrum probably gains a bit of value the closer it becomes to usable. Sprint is just waiting until the right time to sell, which shouldn't be long now that the FCC is approving it for LTE use. That one company was in bad debt and dire need to sell the spectrum.

[cdiao]

UBS Analyst cant seem to do math or otherwise attributes a ridiculous price for WCS at 3x what AT&T just paid to Nextwave. Sprint supposedly has100mhz-pops of WCS (1mhz on average over 100mm pops). At the same price that AT&T paid to Nextwave for a much larger position in WCS (i.e more usable) -- which was estiamted at $0.40/mhz-pop, this results in around $40MM valuation, which is aobut 1/2 month's interest on Sprint's $10B NV project (both capex and opex). Of course, if Sprint's WCS spectrum has hold-up value (if it prevents AT&T form getting benefits fo contiguity for example), it could choose to extract a premium from AT&T -- but arguably it may be worth more to Sprint to make sure AT&T's WCS spectrum is impaired (and cause AT&T to spend more capital to deploy WCS) than to try to extract some chump change from AT&T. Sprint sits on $7.6B of cash with another $1B+ in undrawn credit facilities; and took less than 2 hours to recently raise $1.5B in new bonds. Sprint doesn't own enough WCS to extract much value and whatever "hold-up" value will go up in time the more AT&T invests in the WCS band. Just IMO.

[ericdabbs]

I say Sprint should do a spectrum swap with AT&T. No point of Sprint holding on to WCS spectrum when it doesn't plan to use it. I would much rather have a spectrum swap than a spectrum sale and have Sprint bolster their PCS holdings in any areas where it is delinquent (<30 MHz on avg not counting the G block).

[Josh]

I say Sprint should do a spectrum swap with AT&T. No point of Sprint holding on to WCS spectrum when it doesn't plan to use it. I would much rather have a spectrum swap than a spectrum sale and have Sprint bolster their PCS holdings in any areas where it is delinquent (<30 MHz on avg not counting the G block).

 

I agree, but I think the point that they were trying to make is that what sprint currently owns in the WCS band is very little, so if they were going to do a swap they would get very little in return. If they wait and AT&T is desperate for the rest of the spectrum so that they can take extra LTE to every city across the country (as it would be the main use of the spectrum b/c it is at 2300MHz, much like clearwire at 25-2600MHz), they will get more out of it. If sprint acts like this is what they intend to do, sprint might be able to get more out of it now and save everyone a headache later. I do think that any spectrum swap would be more valuable then a little bit of money when there are few sellers of spectrum right now.

Edited October 4, 2012 by Josh