The FCC’s AWS-3 auction has rocketed past its $10 billion reserve price and surpassed $24 billion in bids after only five days.
The rapid pace at which the auction is climbing helped spur a 10 percent rise in Dish Network’s stock Wednesday. Dish holds 40 MHz of nationwide AWS-4 spectrum—which some analysts estimate is more valuable than the AWS-3 currently being auctioned.
BTIG analyst Walter Piecyk previously valued Dish at $85 per share and its spectrum at $1.50/MHz/POP but given the rate at which the AWS-3 auction is going, he’s increased his implied valuation to $104 per share and $2.00/MHz/POP. Piecyk also notes that at $2.50/MHz/POP, Dish would have an implied value of $122 per share.
In the same note, Piecyk estimates that T-Mobile is likely no longer participating in the AWS-3 auction in a “meaningful way,” given how high the prices have risen and the carrier’s expressed intent to focus on acquiring low-band spectrum.
That would leave AT&T, Dish and Verizon as the largest active participants. Still, given the potential financial effect such a costly bidding war could have for the winners, AT&T, T-Mobile and Verizon all saw their shares slide a little on Wednesday.
Shares of Dish Network are up almost $5 since the auction began. Anticipation that Dish is adding to its already impressive cache of nationwide AWS-4 airwaves is pushing the company one step closer to entering the ring with major wireless carriers.
Given that T-Mobile already has its own stockpile of AWS spectrum, the two are continually talked about as a match made in heaven. Dish arguably needs a carrier partner to make use of its spectrum, and T-Mobile needs more spectrum to fill in the gaping holes in its coverage.
Deutsche Telekom CEO Timotheus Hoettges said yesterday during a Morgan Stanley investor conference that T-Mobile remains an attractive acqusition target for many companies, Dish Network included. While, Hoetgges said that does not mean the company has to stage a fire sale of T-Mobile, he referred to the Uncarrier as a growth stock with a lot of options.
The comments only fanned the flames of a possible Dish/T-Mobile tie-up. As Bloomberg points out, reports were already surfacing in September that Dish Chairman Charlie Ergen said he might be interested in making an offer for T-Mobile after the AWS-3 auction ends.
The AWS-3 auction will continue until the bids stop increasing. As BTIG points out, the FCC yesterday said it would put a $50 million limit on increases in minimum acceptable bid amounts over provisionally winning bids. This change kicks in today with round 20.
Filed Under: Industry regulations
