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Friday, September 08, 2006

FCC Spectrum Auction Closer to an End; T-Mobile Still the Biggest Spender

Stock Tickers: DT, VZ, VOD, S, T, BLS, LEAP, CMCSA, TWX, RIMM, NOK

In a story last month, we noted that the FCC auction process for Auction #66 was already tapering off. That is really the case now. After Round 38 it was becoming clear that T-Mobile, a Deutsche Telekom (DT) company, was coming out as the clear winner. That is still the case.

Is it any surprise that T-Mobile has launched the R-I-M Blackberry and the new Nokia phone services simultaneously? Maybe a dummy would think so. There were various reports out of Dow Jones publications claiming that Comcast (CMCSK) was the one to watch, but that consortium is so complex and the offerings are crossing over so much it can make your head spin. This auction is setting the battleground to make the true digital media convergence come true. Now all we have to worry about is “net neutrality,” but don’t get me started on that. This particular FCC auction will blur the lines that seperated cable companies from phone companies and even wireless plays from cable companies.

You will notice that SpectrumCo (Comcast (CMCSA), Time Warner (TWX), Sprint Nextel (S), Cox Communications, Bright House Networks) did add on some more ground, but T-Mobile is so far well in the lead with the number of bidders tapering off and the change from auction to auction dollar amounts getting smaller and smaller.

These are the key bidding groups:
Cellco (dba Verison Wireless): Verizon (VZ), Vodafone (VOD)
Cingular: AT&T (T), BellSouth (BLS)
Cricket: Leap Wireless (LEAP)
MetroPCS (private, for now)
SpectrumCo LLC: Comcast (CMCSA), Time Warner (TWX), Sprint Nextel (S), Cox Communications, Bright House Networks.
T-Mobile: Deutsche Telekom (DT) unit

Auction No. 66 is for 1,122 licenses:
36 Regional Economic Area Grouping licenses,
352 Economic Area licenses,
734 Cellular Market Area licenses.

HERE is how the auction looked after Round #38:
Qualified Bidders: 168
Rounds Completed: 38
Bidding Days: 11
Results for Round 38
Gross Bids: $12,743,128,200 ($11.8 Billion is from the top 5 bidders)
Dollar Change: $76,153,000
Net Bids:$12,563,802,750
Dollar Change: $55,014,600 (from end of Round 37)
New Bids: 289
Licenses with PWBs*: 978
FCC Held Licenses: 144
Eligible Bidders: 128
*PWBs = Provisionally Winning Bids

Consortium After Round #38
Cellco Partnership $2,798,738,000
Cingular AWS, LLC $1,185,569,000
Cricket Licensee $737,857,000
MetroPCS AWS, LLC $960,146,000
SpectrumCo LLC $2,036,019,000
T-Mobile License LLC $4,100,643,000

Total from these Top Bidders after Round #38: $11,818,972,000

Results After Round #100, with a comparison to Round #38:
You will see below that the pool of eligible bidders has tapered off, and that will continue. The net dollar change from round to round is also becoming negligible.
Bidding Days: 22
Gross Bids: $13,853,958,200
Dollar Change: $1,656,000
% Change: 0.01%
Net Bids: $13,675,457,100
Dollar Change: $297,700
% Change: 0%
New Bids: 19
Withdrawn Bids: 0
Proactive Waivers: 0
Bidders that Reduced Eligibility: 1
Licenses with PWBs*: 1082
FCC Held Licenses: 40
Eligible Bidders: 105
*PWBs = Provisionally Winning Bids

Consortium Winning Round #38 After Round #100
Cellco Partnership $2,798,738,000 $2,803,353,000
Cingular AWS, LLC $1,185,569,000 $1,333,242,000
Cricket Licensee $737,857,000 $707,238,000
MetroPCS AWS, LLC $960,146,000 $1,390,788,000
SpectrumCo LLC $2,036,019,000 $2,367,617,000
T-Mobile License LLC $4,100,643,000 $4,178,806,000

Top Bidder Totals: $11,818,972,000 $12,781,044,000

The auction rounds are still going on, but you should get an idea here of the clear winners that went out to spend the dollars. There is a shot that depending on how far these go out that it could create some balance sheet discrepancies this coming quarter because of the size of some of the auction amounts.

Jon C. Ogg
September 8, 2006

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