Sprint Corp (NYSE: S.N) announced on Saturday it will not join the U.S. government auction of airwaves set for early 2016, as it has adequate airwaves to currently build out its network and for its future needs.
Coming from recent claims from wireless carriers aiming for faster speed for data-guzzling customers, the Federal Communications Commission has scheduled a major auction for March 2016 where the U.S. government plans to buy airwaves from TV broadcasters and resell them to wireless carriers.
As reported by Dow Jones Business News, Sprint said on Saturday that its airwaves at present are “sufficient to provide its current and future customers great network coverage.” The U.S. wireless carrier is about to commence on another major network overhaul it says will sharply improve data speeds.
Sprint has claimed to place the company’s focus on improving its network and market position in the immediate term, as reported by Reuters. But the fourth U.S. wireless carrier based on subscribers, has been struggling to report a profit in recent years. The carrier hasn’t turned an annual profit since 2007, and it burned $2.2 billion in cash in the latest quarter. Additionally, it plans to set up off- balance sheet companies with the backing of parent company SoftBank Group Corp. to finance phones and network equipment and it has also said it doesn’t have plans to tap debt or equity markets.
Sprint’s decision not to participate removes a major player from an auction that is the centerpiece of FCC Chairman Tom Wheeler’s tenure. Rivals such as T-Mobile US Inc., Verizon Communications Inc., and AT&T Inc. are unlikely to drop out of the bidding. The auction will be a success only if carriers are willing to pay enough money to encourage TV broadcasters to part with their airwaves or spectrum.
The airwaves to be auctioned will be low-frequency airwaves that travel farther and penetrate buildings better than airwaves at higher frequencies, meaning carriers can cover larger areas using fewer cell towers. The airwaves are necessary to meet exploding consumer demand to stream videos and browse the Web on smartphones.
What could it mean for Sprint?
Sprint has one of the deepest troves of the spectrum in the industry, but the vast majority of it is situated at higher frequencies. That means Sprint must install more cell antennas to equal the same coverage as AT&T and Verizon, which have far more low-frequency spectrum. Sprint obtained a large swath of its higher-frequency airwaves when it acquired wireless Internet provider Clearwire Corp. in 2013.
A Sprint spokesman said on Saturday that the carrier is “prioritizing its financial resources to improve our network coverage, capacity, speed and reliability now and over the next few years—and we already have the spectrum we need to do so. That is more important for Sprint and its customers than investing in [this] spectrum that won’t benefit our subscribers until 2020 at the earliest.” After the coming auction, it will take several years for the new spectrum to be fully available to the carriers.