Stage 2 of the FCC’s reverse auction hasn’t yet closed, but BTIG on Thursday predicted the bar for will lower significantly forward auction bidders looking to acquire spectrum in this go around.
In the first stage of the FCC’s current spectrum incentive auction, broadcasters participating in the reverse auction set a towering $86.4 billion cost clearing target for forward auction bidders. That target was well above the forecast $33 billion analysts said forward auction players would likely put into bids during the proceedings and ended up being exponentially greater than the $22.5 billion in net proceeds accumulated in Stage 1.
BTIG’s Walter Piecyk on Thursday, however, said Stage 2 forward auction bidders will likely have a much lower hurdle to cross. Though he noted the financial firm has “little visibility” into how much the clearing target price will fall, he nonetheless said the market expectation is it will fall to between $50 billion, representing a 25 percent to 40 percent drop from Stage 1.
“This is a swag guess and, yes, you can drive a truck through that range,” Piecyk wrote. “However, it could give a parameter by which to gauge market reaction ahead of next week’s datapoint.”
According to Piecyk, a lower clearing target around $50 billion could result in a shorter-than-expected auction that ends in Stage 3 with more spectrum available to wireless players. However, a higher target in the $65 billion range could mean the auction will drag out longer and result in a smaller amount of spectrum on the block for the industry to grab.
On the forward auction side, Piecyk said it’s “unlikely” bidding will rise too much above the $23 billion to $30 billion range seen in the net and auction proceeds in the first stage.
Piecyk also tinkered once again with BTIG’s auction timeline, pushing back the Stage 2 forward auction end date from mid-October to the beginning of November. He also bumped BTIG’s Stage 4 forward auction end date from the end of the year 2016 to the end of February 2017.
Filed Under: Telecommunications (spectrums)