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AT&T Boosted Its Mid-Band Spectrum Portfolio in 2015

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AT&T at the AWS-3 spectrum auction

In this part of the series, we will look at the significant spectrum holdings AT&T (T) acquired in 1Q15. AT&T completed this ~$18.2 billion transaction of AWS-3 spectrum holdings during that quarter. It bought these spectrum holdings at the FCC’s (Federal Communications Commission) AWS-3 spectrum auction.

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AT&T was the top player in this FCC auction

In this FCC auction, AT&T bought the highest worth of spectrum holdings. Among the top US wireless telecom companies, Verizon (VZ) bought the second-highest worth of holdings. It acquired ~$10.4 billion in AWS-3 spectrum holdings in this auction.

Meanwhile, T-Mobile (TMUS) acquired the third-highest worth of ~$1.8 billion spectrum holdings in this FCC auction. Sprint (S) did not participate in this auction.

According to AT&T, these acquired spectrum holdings included 251 licenses. AWS-3 is a mid-band capacity spectrum. The mid-band spectrum has particular significance for telecoms in managing increasing wireless data traffic due to its relative coverage and capacity attributes.

The spectrums can be segregated into high, medium, and low bands, according to their frequencies. As we move from high band to low band, the coverage aspect increases. Nevertheless, this coverage gain comes at the cost of lower data traffic capacity.

Instead of taking a direct exposure to AT&T’s stock, you may consider a diversified exposure to the company by investing in the iShares Core High Dividend ETF (HDV). HDV held ~8.1% in the company at the end of November 2015. Telecom companies made up ~14.2% of this ETF on the same date.

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