Share

Sprint Decides To Sit Out Of Upcoming 2016 Airwaves Auction

Depending on how you measure it, Sprint may already hold more spectrum than anyone else in the industry – but it’s mostly high-frequency spectrum, meaning that Sprint has to build more cell towers to get the same level of coverage as AT&T and Verizon.

Advertisement

The Federal Communications Commission has planned a major spectrum auction for March 2016, where the United States government will purchase airwaves from TV broadcasting companies and then resell them to wireless carriers. Sprint might also update its existing network, which will increase its data speed.

Sprint said it is more critical than ever for the FCC to undertake timely special access reform, including pricing, terms and conditions.

Sitting out of the auction will save Sprint billions of dollars, but it could deprive its network of future upgrades, the Wall Street Journal wrote Sunday.

“Sprint’s decision not to participate in the incentive auction highlights the folly of the FCC’s attempt to pick winners and losers before the auction begins”, Pai stated.

Sprint is rolling out LTE FDD in the 800 MHz and 1900 MHz bands, and LTE TDD using its vast hoard of 2.5-GHz spectrum, which it acquired when it bought Clearwire. Notably, Sprint refrained from taking part in the AWS-3 auction which ended in Jan 2015 nor did it participate in its earlier version which was conducted in 2008.

It is very likely that Sprint’s competitors such as T-Mobile US Inc. Sprint now carries a Zacks Rank #2 (Buy).

Verizon Communications remains officially undecided on its plans, though many expect the carrier to be a player.

However, Sprint’s stock has crashed double digits over the last two days in response to both its new pricing for iPhone 6s, 6s Plus, and because it formally announced that it would not partake in next year’s auction of low-band spectrum. “Our view is a delay to 2017 would be a net positive for all, especially broadcasters given wireless might be more committal and it would give us a potential catalyst in a non-presidential year”. It’s also the reason why Sprint’s absence from the upcoming auction is notable. “As long as there is enough spectrum from the broadcasters, it should face a lot less competition in the fight for the 30 megahertz of reserve spectrum”. Such circumstances certainly played a role in Sprint’s evaluation of its cash flow, even with backing from SoftBank. Speculation about prices at the auction heated up after the auction of other, less valuable wireless spectrum drew higher-than-expected prices.

Advertisement

Moody’s, in its report, highlighted Sprint’s need to balance its airwaves holdings so it can compete effectively with rivals across low-, mid- and high-frequency signals.

Sprint Corp (NYSE:S)'s Loss is T-Mobile US Inc (NYSE:TMUS)'s Gain