US DTH giant Dish Network’s claim for more than US$3bn in discounts in the country’s recent AWS-3 spectrum auction is reportedly facing investigation by the Federal Communications Commission. The group won 702 of the 1,614 licences up for auction…
US DTH giant Dish Network’s claim for more than US$3bn in discounts in the country’s recent AWS-3 spectrum auction is reportedly facing investigation by the Federal Communications Commission.
The group won 702 of the 1,614 licences up for auction after making US$13.3bn worth of bids, the regulator revealed late on Friday.
However, it is set to only pay about US$10bn for those licences because it bought them through entities that qualify for a 25% discount aimed at small businesses: NorthStar Wireless LLC and SNR Wireless LicenseCo.
FCC commissioner Ajit Pai is due to ask the regulator’s chairman Tom Wheeler today to investigate the award, reported the Wall Street Journal citing a statement set to be released.
Even with the discounts, the amount Dish paid surprised analysts, as did the record US$41.3bn that the auction raised in total after accounting for the write downs.
The DTH giant declined to comment on the bidding because of the FCC’s anti-collusion rules.
Dish has been amassing mobile spectrum for a number of years and has been looking for a network partner to deploy a terrestrial LTE network across the US. Last year it dominated the country’s H block spectrum auction, sweeping up all the licences after paying the US$1.564bn reserve price.
However, TMF Associates principal Tim Farrar said the AWS-3 bidding suggests Dish chairman Charlie Ergen is instead looking to sell the company – or more likely lease its spectrum – to US telco Verizon Wireless.
“Ergen did not buy a readily deployable collection of spectrum, instead seeking a blocking position in key cities (including New York and Chicago) in an attempt to force other operators to make a deal with him,” he said.
Verizon won 181 licences in total and paid US$10.43bn, which was less than many analysts had expected.
AT&T was the biggest spender and stumped up US$18.2bn for 251 licences in total, which Farrar said was enough to meet its spectrum needs.
T-Mobile US, which Ergen was reportedly looking to buy last year having failed to acquire its larger rival Sprint, won a total 157 licences for US$1.8bn. Sprint sat out of the AWS-3 auction.
The licences up for grabs were in the 1695-1710 MHz, 1755-1780 MHz, and 2155-2180 MHz spectrum bands.
AT&T recently secured US$11.2bn in loans and a US$2.62bn bond to help fund its acquisitions.
The telco said its spending would likely push the group over its 1.8x net-debt-to-EBITDA target in the near-term.
“The company will use excess cash – after paying its dividend – over the next three years to pay down debt, and expects to return to historical debt ratios,” it said.
According to AT&T, mobile traffic on its network has increased 100,000% from January 2007 to the end of December 2014.
AT&T is currently part way through buying Dish’s DTH rival DirecTV in a US$48.5bn deal.
