Sprint will skip wireless spectrum auction in March

Sprint Corp. said Saturday it will not bid on additional wireless airwaves licenses during a federal auction set for March.

Skipping the auction puts rivals AT&T, Verizon and T-Mobile in better shape to snap up the licenses to use high-quality wireless spectrum.

Spectrum is what carries wireless signals when cellphone and other mobile device users stream video, post photos online, check websites and use other popular features of the devices.

The spectrum up for bid next year is particularly valuable because it can carry wireless signals long distances between cell towers and easily inside buildings for better customer connections.

Sprint said it has ample wireless spectrum for its needs, though most of the spectrum it is currently rolling out is of a lower value. It needs to reach cell towers more frequently along the way and has less reach inside buildings.

“Sprint’s focus and overarching imperative must be on improving its network and market position in the immediate term so we can remain a powerful force in fostering competition, consumer benefits and innovation in the wireless broadband world,” Sprint chief executive Marcelo Claure said in a statement. “Sprint has the spectrum it needs to deploy its network architecture of the future.”

Analysts have said bidding in the March spectrum auction could cost carriers such as Sprint and T-Mobile as much as $10 billion. Speculation about prices at the auction heated up after the auction of other, less valuable wireless spectrum drew higher-than-expected prices.

T-Mobile has said it would bid in the auction.

Bond analyst Dave Novosel with Gimme Credit has told clients that financing such bids presents a challenge to T-Mobile and Sprint because it probably would force them to take on significant amounts of additional debt.

“The fly in the ointment for T-Mobile is the potential for a massive use of cash to purchase the spectrum,” Novosel wrote to clients.

Sprint’s network currently is undergoing an upgrade. The company is adding thousands of new cell towers and tens of thousands of smaller cell sites that, for example, can sit on the sides of buildings to help carry signals into the structures.

It also is using other technologies to make the most of its existing wireless spectrum.

“Right now, where they are, it’s logical” to skip the auction, said Bill Ho, an industry analyst with 556 Ventures LLC.

“If Sprint was in better financial shape, maybe it would make sense in the long run” to bid, Ho said.

Sprint officials had said they were weighing a decision to bid and needed to see the auction rules set by the Federal Communications Commission. T-Mobile had been fighting to get the FCC to set aside more of the spectrum for bidding by carriers other than AT&T and Verizon, which generally have more resources and financial strength to bid for the spectrum licenses.

This story was originally published September 26, 2015 at 11:36 AM with the headline "Sprint will skip wireless spectrum auction in March."