45% of spectrum goes to T-Mobile
In the previous part of the series, we learned that T-Mobile (TMUS) purchased 45% of the spectrum sold at the recently concluded FCC (Federal Communications Commission) broadcast incentive auction for 600 MHz (or megahertz) low-band spectrum. T-Mobile reported that it added 31 MHz of spectrum on average nationwide for a total cost of $8 billion.
During the MoffettNathanson Media and Communications Summit held on May 18, 2017, Michael Sievert, T-Mobile’s COO, was asked about T-Mobile’s footprint expansion strategy. Sievert stated that given T-Mobile’s increasing low-band and LTE coverage, the carrier is well positioned to grow its distribution footprint by 30 million to 40 million POPs (points of presence). As per the company, T-Mobile plans to open 3,000 stores in 2017 including 1,500 T-Mobile stores and 1,500 MetroPCS stores. T-Mobile has very little to no market share in these markets. Expansion of the markets would aid in fetching new subscribers and boost the company’s revenue subsequently.
Low-band spectrum is ideal for deploying indoor coverage, as it swiftly penetrates in buildings. T-Mobile can use this spectrum to expand its reach in rural markets that it hasn’t reached before, thereby challenging Verizon (VZ) and AT&T (T).
Also, T-Mobile can utilize its low-band spectrum to boost its coverage in the densely populated urban markets with lots of building barriers. Thus, bagging the largest chunk of auctioned 600 MHz spectrum is no doubt an advantage to T-Mobile’s network improvement strategy. This additional spectrum could aid the company in taking a substantial advantage of emerging wireless opportunities like IoT (Internet of Things).
IDC estimates that the global IoT-installed base will expand from 9.7 billion devices in 2014 to 30.0 billion devices in 2020 as depicted in the above graph.