Sprint will not participate in 2016 airwaves sale

28 Sep 2015 | Author: | No comments yet »

Sprint Corp To Bow Out From The March Spectrum Auction.

“Sprint’s focus and overarching imperative must be on improving its network and market position in the immediate term so we can remain a powerful force in fostering competition, consumer benefits and innovation in the wireless broadband world,” Sprint CEO Marcelo Claure said in a statement. “Sprint has the spectrum it needs to deploy its network architecture of the future.” The auction will allow broadcasters to sell their unused spectrum to mobile carriers, and get a cut of the purchase price. Phone carriers usually have a voracious appetite for wireless spectrum, and for good reason: they don’t want to lose your business because their networks are overloaded or missing coverage.Spectrum is what carries wireless signals when cellphone and other mobile device users stream video, post photos online, check websites and use other popular features of the devices.Sprint Corp (NYSE:S) has announced in a press release that it will not participate in the auction of new wireless airwaves by the Federal Communications Commission (FCC) scheduled for March 2016.

The spectrum up for bid next year is particularly valuable because it can carry wireless signals long distances between cell towers and easily inside buildings for better customer connections. S -2.79 % said it plans to sit out a coming auction of wireless airwaves, a decision that will save the carrier billions of dollars but could deprive its network of upgrades in the future. Spectrum allocation might seem like a boring topic, but with more and more people picking up bandwidth-intensive gadgets, carriers need spectrum to support them.

The provider just announced that it’s passing on the FCC’s upcoming 600MHz auction after determining that its existing airwaves are “sufficient” for its future needs. Sprint currently has spectrum in the 800 MHz, 1900 MHz (1.9 GHz), and 2.5 GHz bands, and over the past year has begun releasing phones that support all three bands, also known as tri-band phones. The company remains confident that its operations will not be affected if it does not acquire any new airwaves, reiterating that the current airwaves are “sufficient to provide its current and future customers great network coverage.” Sprint might also update its existing network, which will increase its data speed. One of the big concerns from smaller carriers like Sprint and T-Mobile going into this auction, though, was whether their larger rivals, Verizon and AT&T, would use their sizable war chests to snap up all the desirable spectrum.

Bond analyst Dave Novosel with Gimme Credit has told clients that financing such bids presents a challenge to T-Mobile and Sprint because it probably would force them to take on significant amounts of additional debt. As per the news release, the FCC will acquire the low-frequency airwave from TV broadcasters, which will then be sold to telecommunication companies through a bidding process. Low-frequency airwaves travel farther and penetrate buildings better than airwaves at higher frequencies, meaning carriers can cover larger areas using fewer cell towers.

The agency agreed to some restrictions—it set aside 30 megahertz of spectrum per market for smaller companies—but did not give T-Mobile everything it wanted. Sprint is betting that there won’t be a big spike in demand that requires more spectrum than it has, or that the lack of 600MHz support won’t hobble compatibility or performance down the line.

An FCC official said on Sunday that the agency wasn’t surprised Sprint decided not to participate given the public hints it has made in the past few months, and pointed out that the last two major auctions were a success even though Sprint wasn’t involved. Earlier this year, both companies were part of a coalition advocating for a larger reserve for small companies — but the FCC rebuffed their request this summer. T-Mobile had been fighting to get the FCC to set aside more of the spectrum for bidding by carriers other than AT&T and Verizon, which generally have more resources and financial strength to bid for the spectrum licenses. Remember how Sprint jumped on WiMAX in order to have 4G data before everyone else, only to regret its decision and spend a lot of time playing catch-up with its LTE-toting rivals? Sprint’s decision to bow out means T-Mobile may have an easier route to winning those airwaves unless other bidders, like technology or cable companies, decide to participate.

The main reason the company stepped out of the auction is the financial issues it faces currently, due to which its stock price has also declined 33.02% over the last 12 months. By upgrading its network, Sprint was able to report growth in its revenues and earnings per share (EPS) in the second-quarter fiscal year 2015 (2QFY15) earnings release. You’ll get to keep your current user name (as long as it doesn’t contain invalid characters, in which case you’ll have to go through a few extra steps to make the transfer), and all your old comments will eventually (not immediately) migrate with you. Furthermore, the company is expected to report a healthy 3QFY15 as it has announced new products and services during the quarter after receiving new investment from SoftBanks, the company’s biggest shareholder.

That is more important for Sprint and its customers than investing in [this] spectrum that won’t benefit our subscribers until 2020 at the earliest.” After the coming auction, it will take several years for the new spectrum to be fully available to the carriers.

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