from BTAB's Jeff Hines and Bo Fifer: PCS REAUCTION COMMENCES TUESDAY (MARCH 23)
HIGHLIGHTS:
-- What price a nationwide footprint? The reauction of C/D/E/F-block PCS
licenses commences tomorrow (23-Mar), with the GSM carriers still
looking to fill in strategic coverage gaps in four major markets.
-- WHO'S BIDDING? In total, 66 entities have qualified to bid, including
all of the public GSM carriers except Aerial. Western Wireless is the
top qualifier based on up-front payments through its Cook Inlet
partnership, followed by Omnipoint bidding as OPCS Three, and Powertel
is backing Eliska Wireless.
-- WHAT ARE THEY BIDDING ON? 134 15 MHz C-block, 208 30 MHz C-block,
three D block, six E Block, and five F-block licenses (all 10 MHz) are
on the table. The most interesting markets are likely to be Chicago,
Dallas, New Orleans, and Las Vegas, which currently comprise the major
holes in the GSM footprint.
-- WHY ARE THEY LIKELY BIDDING? While most of the action is likely to be
in the four major "GSM deficient" markets, we believe some carriers
could be looking to fill in other coverage gaps. Adding capacity
should not be an issue for C-block players, while the D- and E-block
licenses do not cover strategically important locations for the larger
players.
-- NET-NET: By and large, we would expect this auction to wrap up much
quicker than the original C-block auction (which took almost 5 months)
and for winning bids to be more in line with the $3.33/POP average bid
in the original D/E/F auctions than the $40/POP average bid in the
original C-block auctions.
DETAILS:
The reauction of C-, D-, E-, and F-block PCS licenses commences Tuesday (23-
Mar). In total, 66 entities have qualified to bid and all of the public
GSM carriers are represented except Aerial, which elected to stay on the
sidelines. Based on up-front payments, Western Wireless is the top
qualifier under its Cook Inlet partnership, Omnipoint (bidding as OPCS
Three) is the number two qualifier, and Powertel is backing Eliska
Wireless.
Top 10 PCS Auction Qualifiers By Up-Front Payment
Up front
Bidding Payment
Name Backer/Control ($MM)
Cook Inlet/VoiceStream PCS Western Wireless 50.0
OPCS Three Omnipoint 41.0
ConnectBid McCaw/Netscape 38.0
ABC Wireless* Telecorp 29.5
Beta Comm. Gabelli/Rivgam 20.4
Leap Wireless Leap/Chase 20.0
Viper Wireless* Telecorp 17.8
Zuma PCS Alta Comm. 10.0
Eliska Wireless Powertel 9.2
BCN Comm. Independent 6.1
* Commonly controlled entities, combined up front payment = $47.3MM.
Source: Federal Communications Commission, BT Alex. Brown Incorporated.
Most of the top ten bidders have qualified to bid on a large and
geographically diverse set of licenses. Of course, this does not
necessarily indicate where any given bidder may be setting its sights and,
therefore, does not necessarily imply any particular bidding strategies.
Of the four PCS-deficient markets (Chi/Dal/LV/NO), 7 of the top 10
qualifiers are qualified for Chicago and Dallas and 8 qualified for Las
Vegas and New Orleans, with the top three qualifiers qualifying for all
four markets. Overall, 37 bidders have qualified to bid on Chicago, 38 on
Dallas, 40 on Las Vegas, and 41 on New Orleans.
TOP 10 QUALIFYING BIDDERS BY UP FRONT PAYMENT
#1 Cook Inlet/Voice Stream PCS. $50M up front payment. Backed by Western
Wireless. Qualified in Chi/Dal/LV/NO.
#2 OPCS Three. $41M up front payment. Bidding name for Omnipoint.
Partners include Ericsson, Nokia, Siemens, VoiceStream, and Western
Wireless, among others. Qualified in Chi/Dal/LV/NO, among other markets.
#3 ConnectBid. $38M up front payment. Joint venture between Eagle River
(Craig McCaw) and CCG (controlled by Netscape executives). Qualified in
Chi/Dal/LV/NO, among other markets. We find ConnectBid (controlled by
Craig McCaw and Netscape) to be one of the more intriguing bidders.
#4 ABC Wireless. $29.5M up front payment. Controlled by Telecorp
management and in discussions with AT&T Wireless. Company is commonly
controlled with Viper Wireless (#7) with no overlapping bidding. Together,
the two entities have mad up front payments of $47.3M. Qualified in
Dal/LV/NO, among other markets.
#5 Beta Communications. $20.4M up front payment. 49% controlled by Mario
Gabelli, who in turn is affiliated with Rivgam (NE corridor licensee) and
Lynch PCS, which is affiliated with another bidder, BCDJMS, with no plans
for overlapping bidding. Qualified in Chi/Dal/LV, among other markets.
#6 Leap Wireless. $20.0M up front payment. Recently purchases ChaseTel
licenses in Tennessee. Qualified in Chi/LV/NO, among other markets.
#7 Viper Wireless. $17.8M up front payment. Controlled by Telecorp
management and in discussions with AT&T Wireless. Company is commonly
controlled with ABC Wireless (#4) with no overlapping bidding. Together,
the two entities have mad up front payments of $47.3M. Qualified in NO,
among other markets.
#8 Zuma Wireless. $10M up front payment. Affiliated with Alta
Communications. Qualified in Chi/Dal/LV/NO, among other markets.
#9 Eliska Wireless. $9.2M up front payment. Financially backed by
Powertel, which has agreed to extend a credit facility to the company.
Qualified in Chi/Dal/LV/NO, among other markets.
#10 BCN Communications. $6.1M up front payment. Independent bidder.
Focused solely on licenses in and around Philadelphia.
Look For A Quicker, Less Painful End
Given the hotly competitive state of the wireless industry in the U.S., and
the less-than-enticing prospects of being the 6th or 7th competitor in a
market, we would expect this auction to wrap up much quicker than the
original C-block auction (which took almost 5 months) and for winning bids
to be more in line with the $3.33/POP average bid in the original D/E/F
auctions than the $40/POP average bid in the original C-block auctions.
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