Why American telecoms firms are splurging on 5G spectrum

IT MAY BE the most hyped technology since blockchain. But even sophisticated telecoms giants are now placing huge bets on 5G. In early December American regulators started the process of auctioning off radio-frequency bands needed to roll out superfast fifth-generation mobile networks. Industry experts had expected bids to come in at $25bn-30bn between them, less than the $45bn fetched in the last big 4G spectrum sale in 2015—but a tidy sum nonetheless.
In fact, when the first part of the auction was concluded on December 23rd, the bids had reached a staggering $70bn. The winners will be on the hook for “clearing costs” of another $13bn-15bn, in part to compensate satellite firms for giving up some of their spectrum that is particularly well-suited for 5G. The auction will resume on January 4th. By the time it ends, the proceeds may exceed $90bn.

At first blush, this seems like a classic case of overbidding by zealous telecoms firms chasing a shiny new technology. It could leave AT&T and Verizon, America’s mobile-telephony giants, saddled with huge debts. New Street Research, a firm of analysts, reckons that the industry’s overall debt will be between $45bn and $60bn higher than previously forecast.
There is an alternative view, however. As Jonathan Chaplin of New Street puts it, “it is almost impossible for…
Read More

Leave a Reply

Your email address will not be published. Required fields are marked *

This website is using cookies to improve the user-friendliness. You agree by using the website further. Privacy policy

Skip to content