The auction of the 1900 MHz PCS H Block, which has dragged on for longer than analysts thought it would, now appears to be entering its last days--and Dish Network (NASDAQ: DISH) is still likely going to be the winner of the airwaves.
The auction started nearly a month ago, on Jan. 22, and many financial and industry analysts expected it to be over earlier this month. As of this morning, through 109 rounds of bidding, there had been $1.523 billion worth of provisional winning bids, with only two new bids in the last round.
When the number of new bids reaches zero, the auction will end. There are 176 licenses up for auction. Dish has agreed to bid the reserve price of $0.50/MHz-POP for the entire auction, or $1.56 billion.
In a research note, New Street Research analyst Jonathan Chaplin noted that aggregate auction prices are now at $0.48 /MHz-POP, or only 3 percent below Dish's reserve bid, and that Dish is likely to be the winner. "At this point we still believe DISH is most likely to win across all EAs with its reserve bid of $1.56BN," Chaplin wrote, noting that bidding activity has slowed in recent rounds, with bids only increasing $100 million over the last 23 rounds.
"We assume that Dish was bidding against itself in markets with only one bid, and that Dish and a competitor were bidding in markets with more than one bid," he wrote. "It appears that the competition has given up its attempts to outbid Dish, as there have been no markets with more than one bid in the last 10 rounds."
Chaplin noted that in some major markets, especially New York City and Chicago, the bidding prices for the H Block licenses are at prices well below similar bids in the 2006 AWS-1 spectrum auction.
The H Block is a 10 MHz block of paired airwaves that runs from 1915-1920 MHz (for the uplink) and from 1995-2000 MHz (for the downlink). Dish controls spectrum adjacent to a portion of the H Block, called AWS-4; Dish's 40 MHz of AWS-4 spectrum specifically runs from 2000-2020 MHz (for the uplink) and 2180-2200 MHz (for the downlink). However, Dish asked the FCC to let it use the 2000-2020 MHz band for downlink operations instead of uplink as a condition for agreeing to bid the reserve price.
None of the nation's top wireless carriers are participating in the auction, and Dish appears to be the only major bidder. Chaplin noted in an earlier research note that of the 23 total H Block bidders, New Street has tracked down 10 bidders that had less than $40 million in annual revenues over the last three years. Of the remainder, there are nine rural telecommunications companies which also likely have far fewer financial resources Dish. There are also three financial buyers, whose financial capabilities New Street is unsure of.
- see this FCC page
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