Sprint not participating in the 600 MHz auction (report)

[Fraydog]

Seriously. Why are people so obsessed over 600MHz? Magentans think T-Mobile can have the whole continent blanketed with it by late 2016 to 2017 or something, when it is a long ways away from even being able to be used, let alone getting deployed after the auction even happens whenever it does.

People are also forgetting that if the value of the 600 MHz spectrum plummets, that TMUS will also have more spectrum available out of the 700 MHz A block, given that a lot of the speculators will have to drop their prices down. Let's not forget about the other tactic to get more 700 MHz, if the spectrum value drops T-Mobile is likely to get all the nationwide 700 MHz that's owned by speculators and then get roaming agreements on B12 with the rest like USCC, CSpire, Cellcom, and Pioneer.

 

T-Mobile fans have to be obsessed because they know they can get better service in the weak rural and deep in building areas. Make no mistake, this is a great benefit to TMUS that Sprint is out of this auction.

[Volaris]

People are also forgetting that if the value of the 600 MHz spectrum plummets, that TMUS will also have more spectrum available out of the 700 MHz A block, given that a lot of the speculators will have to drop their prices down. Let's not forget about the other tactic to get more 700 MHz, if the spectrum value drops T-Mobile is likely to get all the nationwide 700 MHz that's owned by speculators and then get roaming agreements on B12 with the rest like USCC, CSpire, Cellcom, and Pioneer.

 

T-Mobile fans have to be obsessed because they know they can get better service in the weak rural and deep in building areas. Make no mistake, this is a great benefit to TMUS that Sprint is out of this auction.

This is an amazing point I did not add to my post above. Completely agree. Even right now, 700MHz's speculators have been put on notice, knowing that T-Mobile will get a good chunk of 600MHz without Sprint competing against them. That may cause some of them to sell sooner to T-Mobile rather than keep making interest payments on their loans.

[NYC126]

Sprint basically gave up being a big threat to the other three long term. You need 600mhz spectrum not because of speed but coverage and VOLTE.

 

I am trying to see the benefits of that softbank purchase of Sprint because this company still conduct business as a homeless child.

 

Tmobile has the momentum, and this will add more fuel to them. Hell if they grab a, 10x10 nationwide which the chances now increased then they will be a big threat to the twin bells.

[orangeblue]

Sprint basically gave up being a big threat to the other three long term. You need 600mhz spectrum not because of speed but coverage and VOLTE.

 

I am trying to see the benefits of that softbank purchase of Sprint because this company still conduct business as a homeless child.

 

Tmobile has the momentum, and this will add more fuel to them. Hell if they grab a, 10x10 nationwide which the chances now increased then they will be a big threat to the twin bells.

 

You are seeing this short term. Remember, Sprint has enough spectrum and needs to use it first. Adding yet another radio, or switching current radios is additional capex. You need to have handsets that use the spectrum and there is currently no device able to handle the 600Mhz. Sprint has 800Mhz nationwide. Let other companies battle it out and just buy the other companies later. You need high capacity bands and Sprint is the only carrier within the 2.5Mhz band. If they're able to blanket cities with B41 towers, you will not need 600Mhz coverage. And rural coverage, well do roaming and use 800Mhz you already own.

[Steve Dean]

I see it this way. If TV has to leave the spectrum in order for phone to take it over, it could take much longer that we think. Look how long it has taken the public bands lo leave 800 for Sprint to deploy in Southern CA, Canadian and Mexican boarders, etc... I see the same thing happening with 600 and delays will be inevitable. Why would you want to spend a large chunk of cash, take the chance that you will have delays in deployment, when you can strengthen what is there and get much further ahead of the competition in the game. By the time 600 can start deployment, it really is not going to matter.

[ITK79]

What will this news do to the broadcasters that are on the fence about giving up their spectrum? Only 1 of the national cell phone companies has committed and one just said they are out. Could this change how much spectrum becomes available? I am asking because I stopped following this month's back when Sprint first said they were evaluating the auction.

 

Sent from my HTC M9

[jamisonshaw125]

can everyone stop quoting the entire damn message. Shorten it or something for the people on mobile.

 

As for this, I am not sure how to feel.

 

 

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[ericdabbs]

You are seeing this short term. Remember, Sprint has enough spectrum and needs to use it first. Adding yet another radio, or switching current radios is additional capex. You need to have handsets that use the spectrum and there is currently no device able to handle the 600Mhz. Sprint has 800Mhz nationwide. Let other companies battle it out and just buy the other companies later. You need high capacity bands and Sprint is the only carrier within the 2.5Mhz band. If they're able to blanket cities with B41 towers, you will not need 600Mhz coverage. And rural coverage, well do roaming and use 800Mhz you already own.

 

Handsets not supporting the spectrum is not a big deal.  Once the spectrum is auctioned off if Tmobile, Verizon and AT&T all get a chunk of the 600 MHz spectrum the 3GPP will assign it an LTE band which I hope this time around should be entire 600 MHz band instead an LTE band for each sliver of 5x5 or 10x10 block.  The 3 carriers will all have to collaborate to achieve economies of scale.  I think that argument is blown out of proportion.  There is no need to worry about that at this time because it will be added on when its appropriate.  What I don't understand is why are people rehashing the zero sum game type of scenarios if Sprint were to participate in the 600 MHz auction.  I don't see people clamoring prior to today that they should not bid on the 600 MHz spectrum if Sprint was uncapable of doing both NGN and 600 MHz.  When Marcelo announced the NGN plan I didn't think for a sec that this spelled doom on the 600 MHz plan and probably nobody here.  Why can't both activities happen at the same time?

 

Buying out a competitor when the time comes right is not as easy as it sounds.  I just don't see what it will take for the regulators to even allow 2 national carriers to merge.  We have seen time and time again that the DOJ and other regulators come down hard when two major players try to merge.  Personally I wouldn't want to see less than 4 national carriers since we need competition.  

 

Perhaps I am wrong and Sprint is only making this decision based on the current circumstances of the 600 MHz auction and they know more than we do in that it truly is some huge clusterfuck that won't be of much use.  

[nexgencpu]

Sprint basically gave up being a big threat to the other three long term. You need 600mhz spectrum not because of speed but coverage and VOLTE.

 

I am trying to see the benefits of that softbank purchase of Sprint because this company still conduct business as a homeless child.

 

Tmobile has the momentum, and this will add more fuel to them. Hell if they grab a, 10x10 nationwide which the chances now increased then they will be a big threat to the twin bells.

If Tmobile has taken soo much business with their current spectrum holdings, Sprint has more than a chance to make up ground on all of them fairly quickly if dont properly. 

 

Rootmetrics second half results are already proving fruitful where 2.5 and CA are already deployed.

[lilotimz]

As it stands the 600 mhz band plan will be the same. They will just not have the spectrum auctioned if its not available.

 

Sent from my Nexus 5

[MtnSierraSprint]

It is encouraging to hear comments like nexgencpu's regarding NYC, but certainly in the Western U.S. I feel that Sprint can not compete without a good size chunk of 600 MHZ spectrum, not to mention the issue of indoor capacity, and coverage in less than ideal terrain.  If they can not afford the spectrum then I wonder how they can afford the level of densification that will be required to match coverage and quality of service that ATT, TMobile (with 600 MHZ), and Verizon will be providing. The only way I can see any possibility of Sprint's strategy working is if they have enough agreements that allow for native coverage while roaming on other carriers including those who do purchase 600 MHZ spectrum. That does not seem likely nor a very secure or competitive long term position to be in.

I think Masayoshi Son completely misunderstood the regulatory setting here in the U.S. which correctly has mandated that there be at least 4 Tier 1 carriers. I think he still continues to misunderstand and misjudge it. So now I wonder if he is playing chicken with US regulators where he is essentially saying if you will not let me merge then see just how competitive the 4 carrier mandate will (not) be.

He could not be more clear, that he is not going to make the necessary financial commitment for Sprint to rise above the competition. Sprint is Softbank's company and right now it seems like they have decided that if they can not get a merger, they sure as hell are not going to double down on their initial investment and pay more money for spectrum to the US government that is standing in the way of their intentions. It would seem they have decided to circle the wagons and park Sprint in break even mode if they can achieve that. Recent stories in the WSJ regarding questions about Soft Bank's ability, not to mention resistance to increase spending on Sprint together with current market conditions is discouraging.

"fixing Sprint is turning out to be staggeringly expensive. Sprint doesn't have the money for a once-and-for-all fix, Son concedes, and SoftBank's covenants with banks prevent sinking more cash in."

http://www.ibloomberg.net/japan-telcos-tumble-after-abe-considers-lowering-mobile-phone-fees-barrons-blog/

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=BABA&insttype=Stock&freq=1&show=&time=9


ATT and Verizon are spending at least twice on capex as Sprint and TMobile every year. It is more like three times more, but Sprint has some creative arrangements with partners in addition to its own capex. Money talks, bravado along the lines of we are going to use our brains and outsmart the competition is just not convincing given all three Tier 1 carriers are leaving Sprint behind and have smart people executing their strategies. TMobile must be popping the champagne in celebration of the prospect that they will be able to get more 600 MHZ for less. Say what you will about John L., but I am sure it was not lost on him, that Sprint might not be able to show up for the 600 MHZ auction. I would say TMobile's management has understood and played the regulatory game to its advantage much better than Sprint.


Me personally I thought Softbank understood the task at hand, and was prepared to follow through with the necessary funding including the purchase of 600 MHZ spectrum. I agree with everyone who has expressed disappointment because Sprint's current capex, and this news do not equate with a winning game plan that moves Sprint ahead of the competition, and like everyone here I want to see Sprint win.
 

 

Its a long game of positioning. The densification plan, the statements about being open to a merger, opting out of a big auction. It is all intentional.

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Yes, I just am not encouraged by this approach.

[nexgencpu]

Handsets not supporting the spectrum is not a big deal.  Once the spectrum is auctioned off if Tmobile, Verizon and AT&T all get a chunk of the 600 MHz spectrum the 3GPP will assign it an LTE band which I hope this time around should be entire 600 MHz band instead an LTE band for each sliver of 5x5 or 10x10 block.  The 3 carriers will all have to collaborate to achieve economies of scale.  I think that argument is blown out of proportion.  There is no need to worry about that at this time because it will be added on when its appropriate.  What I don't understand is why are people rehashing the zero sum game type of scenarios if Sprint were to participate in the 600 MHz auction.  I don't see people clamoring prior to today that they should not bid on the 600 MHz spectrum if Sprint was uncapable of doing both NGN and 600 MHz.  Why can't both activities happen at the same time?

 

Buying out a competitor when the time comes right is not as easy as it sounds.  I just don't see what it will take for the regulators to even allow 2 national carriers to merge.  We have seen time and time again that the DOJ and other regulators come down hard when two major players try to merge.  Personally I wouldn't want to see less than 4 national carriers since we need competition.  

This market has reached saturation, with over 300 million cellphones already out there. So all these companies can hope for is to steal customers away from one another. 

 

What would make more economic sense to you? go on an all out war with the other to gain 3-4 million customers a year at best for the next few years, using that 15 billion dollars for the spectrum plus deployment, or gain over 50 million customers in one shot for roughly the same amount including that precious spectrum your clamoring for.

 

If Softband still in it to purchase Tmobile, it would totally make sense to sit out the auction.

 

[ericdabbs]

This market has reached saturation, with over 300 million cellphones already out there. So all these companies can hope for is to steal customers away from one another. 

 

What would make more economic sense to you? go on an all out war with the other to gain 3-4 million customers a year at best for the next few years, using that 15 billion dollars for the spectrum plus deployment, or gain over 50 million customers in one shot for roughly the same amount including that precious spectrum your clamoring for.

 

If Softband still in it to purchase Tmobile, it would totally make sense to sit out the auction.

 

 

I understand that buying out a competitor is the easier solution and it sounds like people are jumping on that bandwagon that a merger is going to happen again. The question is in what circumstances do you realistically think the US regulators would allow a Sprint and Tmobile merger?  If your premise of how the NGN plan is going to improve the Sprint network dramatically in the next several years and if Tmobile obtains 600 MHz and begins to provide more native coverage to improve their network, regulators are going to see it as both businesses are thriving so why need to merge?  To me it sounds like that would be the argument against the merger.  You really think Sprint sitting out of the 600 MHz auction will resolve all regulator concerns? Doubt it. 

 

The only way to show regulators that a merger is warranted is if both carriers are struggling tremendously and that a merger would improve both companies.  With the way that both carriers are shaping right now (Tmobile rising since Legere took over (doesn't matter what his antics are...its working) and Sprint stopping the bleeding in Q1), do you really think that its going to happen?  It doesn't matter what DT and Sprint/Softbank want because I am sure when Masa tried to talk to US regulators last year, DT was probably on board or else you wouldn't hear of any traction in the first place but there had to have been a reason for Masa to back out entirely.

 

Call me naive but Sprint and Tmobile going at it to compete has actually helped Sprint create new programs that were borrowed from Tmobile.  Who would have thought that Sprint would provide the Sprint Global 2G Roaming worldwide and Sprint Open World products if it weren't for Tmobile.  Those 2 programs have been nice perks for new and current Sprint customers...I know I certainly enjoy it. Not only that but Sprint introducing these new iPhone leasing programs are certainly welcomed for iPhone users.  So if you ask me if competition is good...I would say a HELL YEAH!!

 

Oh and then there is that old age question if Sprint/Tmobile merged which is how to integrate the two networks together?  Can't shut down the GSM/HSPA+ network right away and guess what huge increase OPEX and CAPEX  in incurred to maintain both networks.  How is that any cheaper?

 

If Sprint and Tmobile can pull off a merger...kudos to Sprint and Masa and I will be the first to eat my words and support it but I think the chances of that happen is about as big as the 600 MHz spectrum being deployed within the next 3 years.

[sbolen]

Everyone here seems to be fixated on a Sprint/T-Mobile merger. What if the real target is merging with US Cellular or a smaller operator who could go all-in on the reserve spectrum?

 

 

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[MtnSierraSprint]

I see it this way. If TV has to leave the spectrum in order for phone to take it over, it could take much longer that we think. Look how long it has taken the public bands lo leave 800 for Sprint to deploy in Southern CA, Canadian and Mexican boarders, etc... I see the same thing happening with 600 and delays will be inevitable. Why would you want to spend a large chunk of cash, take the chance that you will have delays in deployment, when you can strengthen what is there and get much further ahead of the competition in the game. By the time 600 can start deployment, it really is not going to matter.

 

This point of view has merrit short term, but low band spectrum capacity is the key adavantage that ATT and Verizon have. I just think Sprint/Softbank have to find a way to do both densification and lock down some 600 MHZ spectrum. I have not crunched the numbers, and would not know the values to crunch, I just hope there is a way that makes financial sense, even if that means Softbank foregoes higher returns from other investments. Softbank owns Sprint now, and I hope they are better off making Sprint a winner than sitting on it and trying to figure out how to get rid of it.  What is so dissappointing to me is that it looks like A) Masayoshi Son still thinks he can find a way to complete a merger with TMobile, Or they have thrown in the towel in terms of committing the necessary resources that it will take to achieve competitive advantage.

 

I would love it if densification was the answer, but the competition is not standing still and they are adding the capacity and coverage that can keep them ahead of Sprint and ultimately allow them to siphon off Sprints business. I do not envy the position Softbank is in, but they do have a company in Sprint that can compete and gain market share if they are willing to spend the money.

[Hmight]

This makes sense, but it is disappointing.  Sprint is running low on cash, but I was hoping Softbank to help out, either by giving Sprint cash or just set up another holding entity to buy it for Sprint or lease to others if needed. 

 

I understand it will take up to 5 years to deloy, but having at least 10 mhz of spectrum will help improve their competitive position much more once they have caught up with verizon or att. 

[MtnSierraSprint]

Everyone here seems to be fixated on a Sprint/T-Mobile merger. What if the real target is merging with US Cellular or a smaller operator who could go all-in on the reserve spectrum?

 

 

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Right, I do not think a TMobile / Sprint merger is going to happen, and Sprint not participating in the 600 MHZ auction does not make sense long term. So something like what you suggest must have a very high degree of likelyhood. Not saying it will be with US Cellular but that would certainly be the kind of candidate that would work. One would think that if Sprint has a firm idea of a company to merge with that it will be one that bids on 600 MHZ. I sure look forward to the day this all settles out and we can have some degree of confidence our four national wireless carriers are here to stay and that they are all able to provide good coverage to their customer base.

[MtnSierraSprint]

My guess is Sprint/Dish if Dish picks up some 600MHZ. Although I would rather Softbank opens its checkbook and provides the necessary funding for densification and 600MHZ.

[tybo31316]

I think that Softbank is buying more shares and sitting out this auction because they are preparing to sell the company.

 

Sent from my Nexus 6

[Arysyn]

Since Softbank is purchasing so much more of Sprint's stock, it seems incorrect to state that Softbank isn't going to continue progressing Sprint, even though Softbank/Masa isn't happy about not having T-Mobile currently.

 

However, Masa eventually is going to try again, he isn't going to give up on it, just as he isn't giving up on Sprint. He will find a way to get T-Mobile. He just needs to do it before AT&T.

[Arysyn]

I think that Softbank is buying more shares and sitting out this auction because they are preparing to sell the company.

 

Sent from my Nexus 6

Interesting theory...

 

How would buying more shares help make it easier for him to sell the company. I would think otherwise, as I stated in my previous post how it seems he's more heavily tied to it now.

[tybo31316]

Interesting theory...

 

How would buying more shares help make it easier for him to sell the company. I would think otherwise, as I stated in my previous post how it seems he's more heavily tied to it now.

If they sold out more shares equals more cash if they can get a good price per share.

 

Sent from my Nexus 6

[tmiw]

IIRC Sprint doesn't exactly have enough spectrum for 5x5 LTE in the IBEZ either. Wouldn't it make sense to at bid on 600MHz to at least have low band spectrum in those areas? I feel like it's a mistake not to bid at all unless it's a means to get the auction cancelled as others have mentioned.

[Ascertion]

If they sold out more shares equals more cash if they can get a good price per share.

 

Sent from my Nexus 6

The issue is that it is making the stock go up, and no one is interested in Sprint as-is. Making the stock go up will make it harder to sell off. I'm sure Son is going forward to invest in the company, but if the right offer comes up, I'm sure he'll take it.

 

Sent from my M8

[Steve Dean]

Heck, if SoftBank owns it all, they can go back to being a private company if they would like. Then they do not have to report to anyone but themselves. After they turn it around, they can of public again.