20 Feb

AT&T buys $18.2 billion worth of AWS spectrum

WRITTEN BY Ray Sheffer

AWS spectrum auction

In the last part of the series, we learned about some of the probable sources of leverage on AT&T’s (T) balance sheet in 2015. Now we’ll look at another significant expenditure the company will incur this year.

In the recent auction of high-capacity AWS-3 (Advanced Wireless Services) spectrum by the FCC (Federal Communications Commission), AT&T bought licenses worth $18.2 billion. The company bought 251 licenses in total. As you can see in the chart below, AT&T was the biggest bidder in this auction. Verizon (VZ) was the second largest bidder among telecoms, purchasing spectrums worth $10.4 billion. T-Mobile (TMUS) bought only $1.8 billion worth of the spectrums. Sprint (S), however, didn’t participate in this auction. The company already had significant holdings in high-capacity spectrums in the US.

AT&T buys $18.2 billion worth of AWS spectrum

AWS-3 will boost AT&T’s wireless data capacity

According to AT&T, after including the spectrums from this auction, the company now has 96% coverage of the total population in the AWS-3 bands. The company expects to initiate deployment of these spectrums in 2017-18 to boost its wireless Internet capacity.

The spectrums included in the AWS-3 band are high capacity. These high-capacity spectrums have particular significance for wireless telecoms, as they cater to the fast-growing Internet and video traffic. According to AT&T, wireless data traffic increased by 100,000% on its network from the beginning of 2007 to the end of 2014. Please read Why spectrum is the lifeblood of a wireless network to learn more.

You can get diversified exposure to AT&T through the Technology Select Sector SPDR ETF (XLK). The ETF held ~4.4% in the company at the end of January 2015.

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