Large-scale bidding now underway for 5G wireless spectrum promises to be the telecom industry’s most expensive auction ever as Verizon Communications (VZ), AT&T (T) and T-Mobile US (TMUS) are among those vying for airwaves. Verizon stock and AT&T stock have sold off in recent trading sessions as bidding intensifies.
On Friday, bidding in the government action of mid-band radio spectrum neared $34 billion. The overall total reached $47 billion, already topping the $44.9 billion spent in a 2014 sell-off of what was known as the “AWS-3” auction, or Advanced Wireless Services.
This time, the stakes are higher. Winning bidders must also pay an estimated $13.2 billion in relocation costs and incentive payments to satellite operators that now use the radio spectrum.
“Notably, this auction is far from over and the most recent round bidding rose by more than $3 billion, or 10%,” Morgan Stanley analyst Simon Flannery said in a note to clients Monday. “Many key markets are still seeing significant excess demand.”
Flannery recently downgraded AT&T stock on worries over intensified bidding.
Verizon Stock, AT&T Stock Retreat
Verizon stock shed 1.5% to 59.58 in midday trading on the stock market today. AT&T stock slipped 1.4% to near 29. T-Mobile stock dipped 1.4% to near 130.
The sell-off, known as the “C-Band” auction started on Dec. 8, and will continue into early January. C-Band airwaves reside in the 3.7- to 3.9-gigahertz frequency bands, with roughly 280 megahertz of spectrum up for auction.
Heading into the C-Band auction, Wall Street analysts expected Verizon to be the leading bidder for 5G wireless radio spectrum. In addition to the three biggest wireless service providers, cable TV companies such as Comcast and Charter Communications (CHTR) also loomed as possible bidders.
After five bidding rounds set for today and Tuesday, the auction pauses and will resume on Jan. 4.
Heading into the auction, some Wall Street analysts pegged Verizon’s expected C-Band bidding at around $15 billion with some estimates a bit higher.
Fastest 5G Wireless Services
With the biggest customer base, Verizon trails T-Mobile and AT&T in mid-band spectrum holdings.
While Verizon, AT&T and T-Mobile have been building out mobile 5G wireless networks using low-band airwaves, those 5G services aren’t much faster than existing 4G networks. To get the fastest 5G wireless speeds, wireless firms need mid-band or high-band frequencies.
Verizon stock on Dec. 9 neared a buy point of 62.32. However, Verizon has retreated during the auction.
Verizon stock holds a Relative Strength Rating of only 16 out of a best-possible 99. AT&T holds a Relative Strength Rating of 8.
T-Mobile stock holds a Relative Strength Rating of 72. However, T-Mobile trades above a buy zone.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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