With the conclusion of the government's wireless broadband spectrum auction, restrictions against strategic talks between bidders could be lifted in the coming weeks, allowing for M&A activity to resume among participants.
The qualified bidders include such companies as AT&T Inc., satellite operator EchoStar Communications Corp., and regional wireless carriers MetroPCS Communications Inc. and Leap Wireless International Inc. Before the auction began, the companies were said to have been in communication regarding possible transactions. Removal of the provisions meant to bar collusion between participants would allow them to resume negotiations, if their strategic interests still align.
Federal Communications Commission Chairman Kevin Martin said Tuesday, March 18, that the government had concluded the auction, raising $19.6 billion in bids. The FCC did not meet its minimum price for a block of spectrum reserved for emergency communications among public safety workers, however, which could prolong the auction and the quiet period.
Martin, though, has proposed delinking the public safety spectrum from the rest of the auction. The proposal is being circulated among other commissioners. If they approve, the FCC would make a statement and list the winning bidders. The government would also issue public notice at the same time or shortly afterward. Down payments would be due 10 days later, and the anti-collusion rule would be lifted.
Before the deadline for applications last fall, there was talk of a potential deal between AT&T and EchoStar. Although AT&T has invested significantly in its Internet television service, the company has had resale agreements with satellite operators. However, with the potential for a change in power in Washington this year, a merger between a Bell and a large satellite company may become a regulatory stretch.
AT&T and EchoStar could not comment because of the anti-collusion rules.
MetroPCS and Leap have held intermittent talks over the last four years. Dallas-based MetroPCS made a 7.5 billion hostile bid for Leap in September, but withdrew the offer in early November. The two carriers have similar business models.
They also have complementary footprints, and together would have licenses in all of the top 25 markets. The deal would essentially create a fifth national wireless carrier.
Before the auction, MetroPCS complained to the FCC that the anti-collusion rules could have a "chilling effect on pro-competitive discussion between applicants." The FCC said it could not accommodate the request.
Press officers for MetroPCS and Leap could not be reached.
Sprint Nextel Corp. of Overland Park, Kan., and Clearwire Corp., of Kirkland, Wash., have acknowledged they are trying to revive a wireless broadband pact that fell apart last year. If the companies are looking for outside partners, the conclusion of the 700-megahertz auction would be helpful.
Bidders that lost out on licenses could have an interest in the companies discussing potential partnerships