Given that bidders in the clock phase of the C-band action pledged a record $80.9 billion for the mid-band spectrum, they probably want to know how the existing users are doing on their move out the door.
The two biggest satellite incumbents of the C-band, Intelsat and SES, told the FCC in filing this week that the accelerated relocation is on schedule and they expect to satisfy their clearing obligations by the commission’s aggressive transition deadlines.
Intelsat and SES said they’re on track to clear 120 MHz of spectrum for the deployment of 5G in high-demand areas by December 2021 and to meet the full clearing requirements throughout the continental United States by December 2023. “All regulatory milestones have been met,” they said.
SES and Intelsat need to install thousands of new antennas and filters, as well as satellite receivers to maintain the services they provide to content companies. They also will be launching new satellites to ensure continuity of service for video, data and U.S. government users.
The FCC set a price of $9.7 billion in accelerated clearing payments to urge incumbent satellite operators to move out of the band to make way for the wireless carriers. That’s on top of the relocation costs that the satellite companies are getting.
Onto the next phase
The clock phase of the C-band auction ended on January 15. Winners are not yet known, but Verizon is widely believed to be the top bidder, with analysts estimating its spend anywhere from $29 billion (New Street Research) for 100 MHz of C-band spectrum to $35 billion (Cowen).
Raymond James Research analysts said in a note last week that they estimate Verizon’s spend at $30 billion, AT&T’s at $20 billion and cable’s at $15 billion. Many estimates peg T-Mobile's C-band auction spend in the ballpark of $10 billion.
The Raymond James analysts, led by Ric Prentiss, noted that the next phase for the C-band is the assignment phase, where clock phase high bidders will bid on which specific Partial Economic Area (PEA) license blocks they want by category.
“The assignment phase will take time and could increase the final gross proceeds of the C-band auction beyond the $81B from the clock phase before applying any bidding credits,” they said, adding that in addition, high bidders will be responsible for about $14 billion of estimated clearing costs/FCC-set accelerated relocation payments to be paid in the 2021-2024 timeframe.
“While the clock phase is finally over, the final detailed results of the C-band auction are still probably six to nine weeks away … to tell us who bought how much, and where,” they wrote.
The auction’s high price tag of $80.9 billion surprised a lot of folks, but the bidders didn’t have a lot of choice in matter: Both Verizon and AT&T need mid-band spectrum to compete. If anything, it makes it look as though T-Mobile’s $30 billion merger with Sprint was a bargain, where it acquired a trove of mid-band 2.5 GHz spectrum.
Last week, Bloomberg reported that AT&T was looking to borrow $14 billion to help cover spectrum acquisition costs. Around the same time, T-Mobile announced it was raising $2 billion from the bond market, with net proceeds to cover various things, with the possible financing of additional spectrum being among them.
The big wireless carriers are benefiting from low interest rates, giving them a lot of room to take on more debt, according to industry analyst Roger Entner of Recon Analytics. “If there was a time to go in debt, it’s now,” he said.
The entire C-band includes 500 megahertz and the satellite companies need to vacate the A block by the end of this year and the rest by 2023, making room for 280 megahertz for 5G. That includes all the new filters, antennas and more that the satellite players are deploying to make the move.
"It's basically a big moving job," he said, with the satellite companies getting new technology to provide the same services with less spectrum. “The wireless industry is paying for the upgrade."