AT&T To Buy Wireless Spectrum From EchoStar For $23 Billion Cash (axios.com) 21
AT&T said Tuesday it would buy wireless licenses from EchoStar for $23 billion, after a years-long saga over what the latter would do with its vast spectrum holdings. From a report: EchoStar was reportedly under pressure from regulators and the White House to either start selling its spectrum or potentially lose it. The cash payment is almost three times the size of EchoStar's entire market capitalization.
AT&T said the acquired spectrum covers "virtually every" U.S. market, and will let it speed up and expand the deployment of its home wireless Internet service, as well as continue the phase-out of traditional copper phone line service.
AT&T said the acquired spectrum covers "virtually every" U.S. market, and will let it speed up and expand the deployment of its home wireless Internet service, as well as continue the phase-out of traditional copper phone line service.
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That's what I was thinking too. Spectrum licenses being treated like intellectual Property IP.
What next? License for the Quantum Realm (frequencies (not the correct description, probably should use 'packets')).
Market cap != enterprise value (Score:4, Informative)
Echostar's market cap may only be $8B, but its enterprise value is > $30B. Market cap is just the sum total of all the shares outstanding. This is what a buyer could theoretically take over ownership of the company for. But for a heavily-indebted company like Echostar, the debt obligations are significant... $8B may buy you the company, but it also buys the obligation for all the debt.
Should have been licenses (Score:3)
It makes no sense to sell of parts of the radio spectrum because it's conceptual and extremely limited. The government should have only licensed parts of the radio spectrum for X years, not eternal ownership. The problem is how extremely limited the market is and as a result we already have an entrenched owners that are now gatekeepers of wireless which definitely stifles competition. Furthermore, as technology advances, the RF boundaries should get tighter and the cost per MHz should increase. Selling parts of the radio spectrum with unlimited ownership is absolutely stupid.
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The government should have required sales to be for a nominal value, and ownership only retained on a use-it-or-lose-it basis.
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The government should have only licensed parts of the radio spectrum for X years, not eternal ownership.
Wouldn't matter. At the end of a lease, the elected representatives whose constituents work for such a company would legislate that the company's investment has been so large that giving the lease to someone else is punitive and unfair and stuff.
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A problem with limited-time spectrum licenses is that it costs companies large amounts of money to deploy hardware to utilize the spectrum, so they're not going to want to do that if they face uncertainty about continuing to use the spectrum. Now, "use it or lose it" rules make sense, where if a company (e.g. Dish) is just sitting on unused spectrum, they should either be required to return it to the government or auction it back off under the same rules as the government auctions.
Doesn't make sense (Score:3)
It's wild to imagine Echostar/Dish being worth anything close to that amount of money. From my own experience working inside the company everything always seemed like it was held together with bailing wire and bubble-gum.
I assume there was a highly competitive bidding process for this because there's no way Dish's board of directors would have had the stones to set the price at "three times the company's market cap" on their own.
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When it comes to spectrum, a lot of times you will hear about those bands being sold at auction, and with both T-mobile and Verizon looking to scoop up as much frequency range as they can, AT&T had to jump on it quickly or risk being outbid. There is always an issue when it comes to, "what is the perceived value".
Delete regulated services to help bottom line (Score:2)
T-Mobile screwed in this? (Score:2)
IIRC a bunch of the Dish spectrum was formerly Sprint spectrum that T-Mobile was required to sell as part of their purchase of Sprint. Dish claimed they'd set up a new "4th carrier" for competition, which they never did - it seems like T-Mobile should have the right of first refusal on the spectrum, at least the formerly-Sprint part, rather than have it all go to a competitor (and at a profit for Dish, who did nothing but squat on a valuable resource).
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But if T-Mobile had been able to get that spectrum back, they might not have been able to buy US Cellular, which got them spectrum _and_ customers. They're now solidly in the middle of the pack when it comes to customers (as opposed to before, where AT&T was nipping at their heels) and have _more market share_ than Verizon even though the latter has ~13M more subs (because T-Mobile's mixture of customers is pulling in more money per customer than the other two carriers.)
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Dish didn't end up buying the Sprint 800 MHz spectrum. T-Mobile has instead arranged to sell it to Grain Management for cash plus Grain's 600 MHz spectrum.
https://www.t-mobile.com/news/... [t-mobile.com]
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Ahh, thanks, memory is fuzzy.
$23B in cash (Score:2)
If I had $23B in cash, I sure wouldn't spent it buying wireless licenses.
Hookers and blow? Sure. Maybe even some cool Legos. But wireless licenses? No way.
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$23B?!
I'm going to have a go at ALL OF THEM.