The Federal Communications Commission’s auction for spectrum licenses on the C-Band, a mid-band spectrum between 3.7 and 4GHz, is reaching its end, and AT&T is looking to borrow $14 billion to finance its desired spectrum acquisitions. Bloomerg reports that Bank of America is leading the transaction, which is likely to be a 364-day delayed-draw term loan, with commitments due on January 2.
Experts agree that mid-band frequencies are critical for 5G usability, since they can provide both improved speeds vs 4G LTE while also providing better coverage than the superfast but extremely limited millimeter wave bands used by Verizon and AT&T. As of round 83 of the auction today, gross proceeds reached $80.86 billion, not including accelerated clearing payments and relocation costs to be paid by winners, which are estimated at $9.7 billion and $3.3 billion.
The winners of the auction won’t be known until later, but last week equity research firm Cowen estimated Verizon’s auction spend at $35 billion, AT&T at $20 billion and T-Mobile between $10-$15 billion. AT&T and Verizon are considered to be in the greatest need for this spectrum to allow them to better compete with T-Mobile.
“If T-Mobile spends less than we expect, Verizon or AT&T will likely account for the shortfall,” wrote New Street analyst Jonathan Chaplin in a note to investors Monday. “Neither company has the cash on hand to cover what we expect them to spend in the auction at present; we would expect more debt issuance for the group in coming weeks.”