AT&T (NYSE:T) executives think the company has enough spectrum for the next five years, according to analyst reports of a meeting with AT&T's management held in New York Wednesday night.
AT&T executives made clear that the spectrum amount they were discussing included airwaves that would come from acquisitions the company may make in the next few years. The comments are notable considering the dire picture AT&T often paints of the spectrum supply shortage it and the wider industry are facing.
AT&T "continues to experience exponential data growth and believes spectrum remains in short supply," Jefferies analysts wrote in a research note. "AT&T is working on any and all possibilities around spectrum acquisitions, and reiterated that the market should expect something on this front. AT&T indicated other potential M&A would be for bolt-on capabilities and would not be big enough to be impacted by any spectrum deal should they choose to do anything on this front."
The comments track closely with public comments AT&T executives have made recently: that acquiring new spectrum is the top priority for the company and that the FCC and federal government should do all it can to make more spectrum available.
Indeed, AT&T CEO Randall Stephenson said at a panel in Washington, D.C., earlier this week that the company is interested in purchasing Verizon Wireless' (NYSE:VZ) 700 MHz Lower B Block spectrum, radio waves that Verizon has proposed selling if it gets regulatory approval to purchase AWS spectrum from a group of cable companies.
For its part, Verizon has said its current spectrum holdings will not provide sufficient capacity to meet the growing demand for mobile broadband by 2013 in some areas and by 2015 in many more.
According to the analyst reports, AT&T executives also talked about other ways the company might be able to monetize its network. According to BTIG analyst Walter Piecyk, Stephenson noted that the connected car remains a major opportunity for growth. Verizon Communications recently spent $612 million to acquire Hughes Telematics, which makes wireless telematics for cars. Additionally, according to the Jefferies analysts, AT&T believes its Digital Life home automation business as well as "third-party pay models where [AT&T is] effectively the shipping and handling vehicle e.g. Kindle" will provide growth.
The AT&T executives also dwelt on smartphone subsidies, and seemed to indicate that the current subsidy and pricing models were going to be in place for the foreseeable future, particularly for Apple's (NASDAQ:AAPL) iPhone. Sprint Nextel's (NYSE:S) Virgin Mobile brand and Cricket provider Leap Wireless (NASDAQ:LEAP) will soon offer unsubsidized iPhones with prepaid pricing plans. AT&T does not appear to be going that route any time soon.
"We have done a lot of research on this and we have not seen our customers say to us, 'We welcome paying $500-$600 for a phone,'" AT&T Mobility CEO Ralph de la Vega said, according to Piecyk.
- see this BTIG blog post (reg. req.)
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Article updated June 15 based on clarifications from AT&T.