AT&T still has money left allowing it to improve its 5G coverage in the U.S.
AT&T still has enough cash left to add to its holdings of 3.45GHz mid-band spectrum for 5G.
According to the tea leaf readers (AKA analysts) working for New Street Research, AT&T still has some money left in the bank after the $5.75 billion deal to buy consumer fiber firm Lumen Technologies. The deal was announced Wednesday and on Friday, New Street Research said that the aforementioned transaction isn't expected to stop the nation's third largest wireless carrier from buying more mid-band 3.45GHz spectrum for its 5G wireless service.
How AT&T and Verizon bet on the wrong spectrum to build out their 5G networks a few years ago
We often pass along the story about how T-Mobile became the 5G leader in the U.S. AT&T and Verizon started building out their 5G networks using its fastest airwaves, millimeter wave (mmWave), which is in the high-band. What AT&T and Verizon failed to take into consideration was that as fast as mmWave spectrum is, it travels extremely short distances which limits the number of customers able to connect to these signals.
T-Mobile's 5G layer cake which helped it take the early 4G lead in the States. | Image credit-T-Mobile
Meanwhile, T-Mobile had a different idea. Using the 2.5GHz mid-band spectrum it picked up from Sprint in the $26 billion acquisition of its rival, T-Mobile proved that using mid-band was the way to build a 5G network in the U.S. Not as fast as mmWave, mid-band is still faster than low-band. While mid-band signals don't travel as far as low-band, they do travel longer distances than mmWave. T-Mobile rode its Goldilocks mid-band spectrum to become the early 5G leader in the U.S., a position it still has to this day.
But the story doesn't end there. Taking notice of T-Mobile's success using mid-band airwaves, AT&T and Verizon spent more than $68 billion to win several C-band licenses during an FCC auction. Still, AT&T has admitted that it seriously trails T-Mobile and Verizon in mid-band and is using a strategy that includes using C-band spectrum (3.7GHz-4.2GHz) and 3.45GHz mi-band spectrum to catch up to its rivals.
"Unlike legacy spectrum below 2.5GHz, mid-band spectrum is neither encumbered by legacy technologies nor broken up into narrow, paired slivers incapable of supporting high-speed 5G applications. Unlike millimeter wave spectrum, mid-band spectrum is capable of supporting wide-area networks covering urban and suburban neighborhoods.
-AT&T
New Street says that AT&T has the financial wherewithal to buy more spectrum. A new report from Light Reading says that AT&T is already kicking the tires on the purchase of $1.2 billion of 3.45GHz spectrum from UScellular and SoniqWave. That would leave AT&T with $3 billion available for additional spectrum purchases according to AT&T. New Street's analysis puts that figure at $7 billion.
AT&T should have enough money to buy more 3.45GHz spectrum
If New Street's forecast of AT&T's cash is correct, the $7 billion would give AT&T enough juice to buy the 3.45GHz spectrum that T-Mobile sold Columbia Capital last September, and some AWS-3 licenses that AT&T is expected to buy. However, it should be pointed out that if AT&T plans on buying Columbia Capital's 3.45GHz holdings, it will have to sell part of Lumen's fiber business to an equity partner. Such a move was already baked into the AT&T-Lumen deal.
Back in March, AT&T requested a waiver from the FCC allowing it to exceed the regulatory agency's limit of 40MHz of 3.45GHz spectrum that a carrier can control. The 40MHz limit expires next January 4th. But because its acquisition of 3.45 GHz spectrum holdings from UScellular would put AT&T over the FCC limit in some markets, AT&T asked for this waiver which has yet to be granted. If the waiver is not approved, AT&T might have to scrap or revise its plan to obtain more 3.45GHz spectrum.
In a recent filing made with the FCC, AT&T disclosed its 3.45GHz holdings and wrote, "Verizon and T-Mobile hold the majority of the remaining unpaired mid-band spectrum outside the 3.45GHz band. As things currently stand, AT&T's most realistic catch-up opportunities lie in the 3.45GHz spectrum band. Given the lack of a clear spectrum pipeline or mid-band spectrum auction on the horizon, the secondary market represents the only opportunity for AT&T to catch up in the near- to mid-term."
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