The latest chapter of Cox's wild wireless ride will soon close: Cox President Pat Esser told Bloomberg the company could to sell off its wireless network and spectrum. ("In the near term we don't have any plans to sell the spectrum," clarified Cox spokeswoman Jill Ullman. "There are many, many options we have.")
If Cox does decide to sell its spectrum and network, who will buy it?
Let's start with the network first. Cox built a CDMA EV-DO network on its AWS spectrum in a number of unnamed markets using equipment from Alcatel-Lucent (NYSE:ALU) and Huawei. The company also tested an LTE network on its 700 MHz spectrum in Phoenix and San Diego. What will happen to those base stations? Current Analysis analyst William Ho said such network equipment is routinely resold, so Cox probably won't have to record the effort as a total loss. However, if base stations are anything like old cell phones, Cox will probably get pennies on the dollar in its attempts to resell the equipment. Potential buyers for the base stations and associated network equipment span the gamut, from larger CDMA carriers like Sprint Nextel (NYSE:S) to smaller, regional players like SI Wireless.
Aside from the actual network equipment, the far more interesting question is who will buy Cox's spectrum licenses. In 2006, Cox teamed with Comcast, Time Warner Cable and Sprint as the SpectrumCo joint venture to bid on AWS spectrum licenses during the FCC's Auction 66. (Sprint exited SpectrumCo in 2007.) SpectrumCo in 2006 spent $2.4 billion on licenses covering most of the populated areas of the United States. (PhoneScoop has an excellent breakdown of the AWS results.)
Then, in March 2008, Cox separately purchased around two dozen 700 MHz licenses in parts of Florida, Virginia, the Southwest and elsewhere for $305 million as part of the FCC's 700 MHz spectrum auction, dubbed Auction 73.
Cox owns AWS and 700 MHz licenses scattered across the country.
Finally, in November 2008, Cox exited SpectrumCo (according to this FCC filing) and took with it 31 AWS licenses in parts of California, Georgia, Oklahoma, the Southwest and elsewhere. The licenses Cox departed with cost around $540 million during the AWS auction. At the time, Cox said it planned to use its 700 MHz and AWS licenses "to launch commercial service in 2009 using an advanced network that will allow CCI (Cox) customers to program their home DVRs, access their e-mail and voice mail that they receive at home, and watch television shows, all on their wireless handsets." (Cox's current wireless offerings, which rely on an MVNO deal with Sprint, look much different.)
The most obvious buyer for Cox's 700 MHz licenses is AT&T Mobility (NYSE:T). AT&T is working to purchase 700 MHz licenses from small, regional players in locations in Minnesota and Wisconsin and Kansas and Massachusetts and elsewhere for its forthcoming LTE network. However, AT&T could face significant static in its attempts to purchase Cox's 700 MHz holdings from those opposed to its proposed $39 billion acquisition of T-Mobile USA. Other possible purchasers of Cox's 700 MHz holdings include Verizon Wireless (NYSE:VZ) and U.S. Cellular (if Cox's markets match with U.S. Cellular's LTE ambitions).
As for Cox's AWS spectrum holdings, potential purchasers include AT&T and Verizon (both of which intend to bolster their respective 700 MHz LTE networks with AWS spectrum as backup). MetroPCS (NYSE:PCS) could also be interested in Cox's AWS holdings; MetroPCS is building out an LTE network in AWS spectrum, and has made no secret of its desire for additional radio waves.
But perhaps the most interesting potential buyer for Cox's AWS spectrum is Sprint. According to Current Analysis' Ho, Sprint could make a major play for the AWS spectrum from Cox and SpectrumCo and use it to build a nationwide LTE offering. Sprint recorded cash and cash equivalents of around $3.6 billion at the end of its most recent quarter.
Of course, Sprint has much on its plate. The carrier is currently upgrading its wireless network via a program dubbed Network Vision; Sprint expects to spend up to $5 billion over the next few years on Network Vision. Further, Sprint is rumored to be involved in a network-sharing deal with LightSquared that could satisfy its LTE needs.
Nonetheless, the AWS licenses of SpectrumCo and Cox may well be up for grabs. Indeed, SpectrumCo is represented by the law firm Willkie Farr & Gallagher LLP, which recently advised Telcordia on its sale to Ericsson for $1.15 billion. --Mike