AT&T is quietly deploying a 10 MHz block of 700 MHz spectrum in New York and other markets, according to Walter Piecyk of BTIG Research. And that could position it to swing a spectrum deal that would benefit Dish Network.
The deployment is being used for increased capacity and faster data speeds, supplementing AT&T’s PCS and WCS spectrum. It’s a combination of two adjacent 6 MHz blocks of spectrum D and E, Piecyk noted in a blog post. AT&T owns both blocks in some markets, covering one-fourth of the population in some of the nation’s biggest cities.
AT&T owns only one of two 6 MHz blocks covering the remaining 75% of the country, however, and that spectrum “has far less usability,” according to Piecyk, who based his analysis on data from Milan Milanovic of Cellular Insights. And Dish owns the adjacent block in nearly all those markets, which sets up a potential spectrum swap that would help both companies.
“There could be an opportunity for Dish to sell or swap its Band 29 spectrum with AT&T. We value Dish’s Band 29 spectrum at $969 million, after tax,” Piecyk wrote. “Dish’s Band 29 spectrum has unique value to AT&T, which can combine it with its Band 29 spectrum for immediate use. Band 29 has been in iPhones since 2014 with the introduction of the iPhone 6/6+, so the immediate benefit to AT&T is even greater than Band 66. Therefore, AT&T could clearly assign a higher value than $.85/MHz/POP to this spectrum.”
In return for Dish’s Band 29 airwaves, AT&T could offer the 600 MHz spectrum it picked up during the incentive auction that closed earlier this year. AT&T has more low-band spectrum than any other U.S. carrier, according to Allnet Insights & Analytics, and it may be interested in offloading its new airwaves in favor of spectrum it could deploy sooner to boost capacity in some key markets.
“The spectrum AT&T just won in the broadcast incentive auction has similar value to Dish’s Band 29 spectrum. In addition, it’s unclear if AT&T actually wanted to buy that spectrum given the low activity in later rounds of the incentive auction,” Piecyk wrote. “All 23 licenses that AT&T acquired are in markets where Dish also acquired licenses, so a combination would provide increased spectrum density in a number of markets including San Francisco, Philly, D.C., and Dallas.”