Operational Funds, Debt Pay for AT$T Spectrum

from: PC Magazine [1]

Operational Funds, Debt Pay for AT&T Spectrum

03.21.08

by Chloe Albanesius

AT&T will be dipping into operational funds and accruing debt to pay off its recent spectrum purchases, according to government filings.

AT&T spent $6.6 billion to acquire 227 licenses in the Federal Communication Commission 's (FCC) 700 MHz spectrum auction, which ended Tuesday. The company already handed over a $500 million down payment prior to the start of the auction, but must pay an additional $827 million by April 3, according to paperwork filed Thursday with the Securities and Exchange Commission (SEC).

The final payment of $5.309 billion is due by April 17, AT&T said.

To cover those costs, AT&T will be using a combination of operational funds, and either short-term or long-term debt, depending on market conditions, the filing said.

The licenses acquired by AT&T are in the B-block. Verizon also made several purchases in the B-block, as well as the A and open access C-block, for a total of $9.4 billion.

"AT&T's strong spectrum holdings position the company to further enhance the quality and reliability of existing wireless broadband and voice services, and to set the foundation for new-generation wireless broadband technologies and services." Ralph de la Vega, president and CEO of AT&T's wireless unit, said earlier this week.

Though Google pushed for open access requirements in the C-block, it did not make any winning bids. Alltel and Cablevision were also approved to bid, but won nothing.

Other companies that secured spectrum include: U.S. Cellular, which – bidding as King Street Wireless, bought 152 licenses for $400 million, mostly in the B-block; Puerto Rico Telephone Company, of which Mexican billionaire Carlos Slim Helu is reportedly an affiliate, which bought two licenses in Puerto Rico for $31 million; Qualcomm, which made an opening bid for the public safety D-block, but ultimately only purchased 9 other licenses for $1 billion; Cox Wireless, which bought 22 licenses for $304 million; EchoStar, bidding as Frontier Wireless, which bought 168 licenses for $712 million; and Chevron, which bought 3 licenses for $1.7 million.