Tom: If you compare the prices paid on a per CDMA carrier basis (which is really the correct way to examine it since this relates to actual capacity), then the prices that CASH BUYERS paid for Auction 11 properties were not all that out of line with Auction 5 TIME PAYMENT price. In addition, it should be important to point out that Auction 5 was all "Goverment financed" bidding. Vs. Auction 11 which was mixed "Time Payments "F Blocks", and Pay in Cash at the end of the Auction D,E Blocks. So the bidding on the F Blocks was tempered against those that were willing to pay cash up front on the D,E Blocks (IMO).
Let's take an example:
General Wireless bid 199 million for 30Mhz C Block in Atlanta in Auction 5 (22 CDMA Carriers) $9.04 Million per carrier.
In Atlanta, In Auction 11 Alltel paid 34 Million CASH Price for 10Mhz E Block (6 CDMA Carriers) $5.66 Million per Carrier.
So one was a cash payer, the other was a financed payer.
In addition, the C Blocks held another financial incentive that the D,E,F Blocks did not! And that was the ability to disaggragate the spectrum once buildout was completed and selling the disaggragated spectrum at a profit! Like LWIN recently did in SLC/Provo in which they sold 15 Mhz to Cingular for 136 million net. Spectrum which they paid less than 5 million to start with.
Nextwave simply bid up pricing to secure their positions, without the financial resources in order to repay them. That is called Speculation in my book! Again, Auction 11 was no surprise that the FCC pulled on them. They knew it was coming. Poor business decisions are unfortunate, but, It always sounds better when you can put the blame them on others!
PCSTEL |
