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AT&T borrows $14.7 billion to buy spectrum

AT&T has entered into a loan agreement worth US$14.7 billion with Bank of America as it seeks to raise money for what looks set to be a hefty bill from the ongoing C-band spectrum auction.

The US operator shared the information in an SEC filing, which stated that it will use the proceeds of the loan for general corporate purposes, “which may include among other things, financing acquisitions of additional spectrum.”

It’s a huge loan, but hardly comes as a surprise.

The operator is one of a number of big telcos expected to shoulder the lion’s share of the financial burden of the FCC’s auction of 3.7 GHz (C-band) frequencies, which raised a staggering $80.92 billion in the first stage. Phase one drew to a close last month and the second phase – the assignment stage, in which telcos bid for their position on the spectrum – is due to get underway on Monday, but is not likely to add a significant amount to the auction total. However, as Sasha Javid, spectrum specialist, and COO of broadcast data network BitPath, has pointed out, the winning bidders will share an obligation to pay out an additional $13 billion to the satellite incumbents in clearing and relocation costs, which pushes the auction total further towards the $100 billion mark.

We won’t know who has won what or for how much until after phase two is completed, but it’s a pretty safe bet that AT&T could be handing over as much as tens of billions of dollars.

There are similar reports about Verizon, while T-Mobile US is expected to have committed a smaller amount. But it’s all relative. Last month T-Mobile tapped the bond markets to the tune of $3 billion, also with a view to financing spectrum acquisitions.

Unnamed sources cited by Bloomberg leaked the AT&T loan information a couple of weeks ago. At the time the newswire noted that the one-year structure of the loan suggests that the telco will refinance it in the bond market at a later date. AT&T now has confirmed that the loan is available for a single draw at any time before 29 May; once drawn, it will be payable in 364 days.

On a price per MHz/pop basis, the C-band auction did not raise unreasonably big sums, but the volume of spectrum being fought over – 280 MHz – means operators that win a large amount of spectrum will have to pay a large amount for the privilege. And that’s putting it mildly. No wonder we’re seeing multi-billion-dollar loan deals.

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26 comments

  1. Avatar Professor Peter Curwen 03/02/2021 @ 3:23 pm

    Has anyone done any research into how auction bids are affected by interest rates? The vast sums raised in the C-band auction would have presented massive financing/refinancing problems in the good old days of 5%+ interest rates – I’m old enough to have had a 13% mortgage.

    • Avatar Wanda Renee Mills 05/02/2021 @ 1:49 am

      Interesting. Thanks!

  2. Avatar Eric Schlatter 03/02/2021 @ 10:55 pm

    My parents in early 1980’s had an 18% mortgage rate in Southern California!

  3. Avatar BUDDY BLIZARD 04/02/2021 @ 12:11 am

    So this means we’ll be paying more
    For our internet and phone service.
    I know you’ll say no but I know we will and you do too.

  4. Avatar Steve Ignots 04/02/2021 @ 2:46 am

    Yes, the government wouldn’t have made nearly as much in the good old days.

  5. Avatar Jill Arthur 04/02/2021 @ 2:46 am

    How about AT&T get better customer service or get fiber out to more neighborhoods.

  6. Avatar David Laidig 04/02/2021 @ 6:05 am

    Spectrum. All the way back to time magazine 1927. Sold over and over with the principals making hundreds of millions while the companies fight to stay alive. Congress broke up AT&T in 1984. So it looks like here we go again.

    • Avatar Val 05/02/2021 @ 3:26 am

      MaBell strikes again. If AT&T does to spectrum what it did to Directv, service is really going to stink!

  7. Avatar Everette Keeney 04/02/2021 @ 10:56 am

    Let’s hope AT&T has better internet and a good price for seniors.I cancel spectrum.80 monthly for internet that was down most of the overnight hours.

  8. Avatar Cris 04/02/2021 @ 1:54 pm

    Such an idiotic headline….you know there is a cable/internet company named…Spectrum…right?

    • Scott Bicheno Scott Bicheno 05/02/2021 @ 9:21 am

      I didn’t, but if that was the subject of the headline it would have been capitalised, wouldn’t it? Try to get out more, Cris.

      • Avatar John 05/02/2021 @ 11:53 am

        You never heard of Spectrum?
        Time Warner?
        Where do you live?

        • Scott Bicheno Scott Bicheno 08/02/2021 @ 9:15 am

          Antarctica

      • Avatar Girth Brooks 05/02/2021 @ 12:02 pm

        Some people read a word in the headline and comment like the read the whole story…smh

    • Avatar Mike 10/02/2021 @ 5:00 pm

      such an idiotic comment. Now the debate went off on a complete tangent and you created a rumour that was never there in the first place

  9. Avatar Timo 04/02/2021 @ 4:07 pm

    This farce should be illegal. There needs to be more competition in the ISP industry

  10. Avatar JT 04/02/2021 @ 10:53 pm

    Dear Lord no! Everything this awful company touches turns into a steaming pile of dog poo. Spectrum is barely tolerable as it is. They destroyed directv. Whatcha the same thing happen to their Spectrum unit if they somehow convince regulators to allow the sale.

  11. Avatar Sherry Boris 04/02/2021 @ 10:59 pm

    IF AT&T ACCUIRES SPECTRUM THEY WILL DESTROY THEM JUST LIKE THEY DID WITH DIRECTV. I KNOW, I WAS WITH DIRECTV FOR 20 YEARS AND AFTER AT&T AQUIRED THEM CUSTOMERS SERVICE, EQUIPMENT AND SERVICES WENT TO HELL. I SWITCHED TO SPECTRUM CHARTER IN DECEMBER 2019 AND NOW I SEE THIS!
    AT&T KEEPS DESTROYING OUR INTERNET, MOBILE AND TV SERVICE!

    • Avatar Jason Owens CWA 05/02/2021 @ 3:20 pm

      This has nothing to do with the cable TV provider named Spectrum. The word spectrum is defined as a band of a particular thing. In this case it’s a signal band for cellular connection.

  12. Avatar Manuel Labor 04/02/2021 @ 11:35 pm

    Wasn’t Spectrum, once part of AT&T?

  13. Avatar Mamabear 05/02/2021 @ 5:05 am

    AT&T is the worst phone company I’ve ever dealt with, they messed up on my account not once, but three times!! Then they wanted to charge me for their mistakes, I’m in the process of suing them and also the president of AT&T.

    I was told that the president of AT&T doesn’t deal with customers by one of his clients from his office and if that’s the case then he shouldn’t of taken on a job like AT&T, what does he expect if his own employees cannot fix an issue, that we just deal with it and keep being charged hundreds of dollars for their mistakes?! Yeah, I don’t think so!

  14. Avatar Christine Rennie 05/02/2021 @ 11:19 am

    Spectrum also bought Time Warner Cable . Gave only preexisting customers used , out dated equipment . I seem to have to get a new cable box or remote every three months .

  15. Avatar Jason 05/02/2021 @ 11:46 am

    This is for a license to operate cell phones on a certain band. This has nothing to do with the cable TV provider named Spectrum. Reading the comments it seems like many people don’t understand this

  16. Avatar John 05/02/2021 @ 2:19 pm

    Obviously some people only read the headline and not the story.

  17. Avatar Kay 01/03/2021 @ 4:06 pm

    This concerns me as I currently have AT&T for home phone and Internet. The price keeps going up and the service down, down, down. If AT&T has purchased Spectrum we (where I live) are is a whole world of hurt! The only two ISP’s available to us is AT&T and Spectrum.. Now only AT&T?? Isn’t this called a monopoly? Where is the FCC on this issue?

    Understanding the Sherman Antitrust Act

    The Sherman Antitrust makes monopoly power illegal. Under the Sherman Act monopoly power is considered the ability of a business to control a price within its relevant product market or its geographic market or to exclude a competitor from doing business within its relevant product market or geographic market. In order to meet this definition, it is only necessary to prove that the business had the power to fix prices or exclude competitors. The plaintiff does not need to prove that prices were actually raised or that competitors were actually excluded from the market.

    “Since the passage of the Sherman Act, however, court rulings have shaped the definition of monopoly power. Proving that a company violated the Sherman Antitrust Act requires more than just proving that the company exercised a monopoly. A plaintiff or the government must show that a monopoly existed, and that said power was accompanied by some anti-competitive act by the offending company in a relevant market.”

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