J.P. 摩根-美股-电信服务业-电信服务与基站：现在和未来的频谱拍卖概述-2019.3.14-29页.pdf

North America Equity Research14 March 2019 Telecom Services&TowersCurrent and Upcoming Spectrum Auction OverviewTelecom Services/Cable&SatellitePhilip Cusick,CFA AC(1-212)622-Bloomberg JPMA CUSICK Sebastiano C Petti(1-212)622-Richard Choe(1-212)622-Reed Kern(1-212)622-J.P.Morgan Securities LLCSee page 27 for analyst certification and important disclosures.J.P.Morgan does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment With the first of several mmWave auctions complete,and another to start today,in this report we review the several spectrum auctions with visibility through 2020.We also estimate likely spend on each of these auctions as well as carriers likely demand.The FCCs Auction 102(24 GHz)is set to begin today for 700 MHz of fallow spectrum which we believe will generate sizable demand.Chairman Pai recently reiterated his goal to auction an additional 2.4 GHz of mmWave spectrum in 2H19 in the 37,39,and 47 GHz bands.In addition,we expect clarity on the C-Band(3.7-4.2 GHz)NPRM at the FCC with our base case remaining an order around mid-year with a potential market-based sale sometime in late 2019/early 2020.We believe the 3.5 GHz CBRS spectrum auction for 70 MHz nationwide will slip into 2020 with the current FCC administration prioritizing higher the numerous auctions above.The FCC continues to explore making additional spectrum bands available for terrestrial wireless use such as the 6 GHz C-Banduplink,the 2.5 GHz band,and unlicensed 3.45-3.55 GHz.Spectrum auctions could total$18-30b in 2019-20.Over the next several years an abundance of spectrum is expected to come to market across the US which began with the recently completed 28 GHz auction where the FCC auctioned the remaining licenses in that band(24%)for$703m.The 24 GHz auction is set to begin today for 700 MHz of fallow spectrum which we estimate will clear for$4.4b in total proceeds($0.02/MHz-pop).By comparison,the 28 GHz auction cleared at$0.011/MHz-pop which compares to our estimate of$755m ahead of the auction.Beyond that,we expect 2400 MHz of spectrum from the 37,39,and 47 GHz bands to be auctioned starting in late 2019 clearing at an estimated$3.3b/$1.4b/$3.3b,respectively($8b total).We expect the CBRS auction to take place in 2020 now that auction rules have been finalized and estimate$3.4b in proceeds.Finally,with the C-Band comment and reply periods complete,we expect additional clarity from the FCCs NPRM around mid-year.Our base case remains a final order around mid-year with a market-based sale near year-end 2019 or early 2020.We continue to value the proposed 180 MHz of C-Band spectrum at$14.6b or$0.25/MHz-pop.28 GHz clears at$703m;winning bidders to be released upon close of 24 GHz auction.FCCs Auction 101(28 GHz)closed on January 24that a level slightly below our expectations($703m vs.estimate of$755m)in our recent Spectrum Primer published in January 2019.In total,the FCC sold 2965 licenses across 1533 markets(counties).Licenses in Dane,Wisconsin(home to Madison)sold for the highest total price$12.5m/$11.4m for each license followed by Honolulu($10.2/$10.1m)and Linn,Iowa(Cedar Rapids)at$10.0m/$9.8m.The FCC will not reveal winning bidders until after the close of Auction 102 bidding(discussed in more detail below),but because of Verizons dominance in that band prior to the auction(estimated 76%nationwide)we expected the company to aggressively bid for remaining licenses and for a rather quick auction.However,the auction stretched 38 days(176 rounds)implying significant bidding from at least one additional party.Other qualified bidders in the 28 GHz auction include AT&T,T-Mobile,Dish,and US Cellular.Wireline carriers Frontier and Windstream registered for the 28 GHz auction.2North America Equity Research14 March 2019Philip Cusick,CFA(1-212)622- 24 GHz Auction 102 set to begin today.Across the 700 MHz of largely fallow spectrum in the 24 GHz band,we estimate total proceeds of$4.4b implying a$0.02/MHz-pop value.This compares to the clearing price of the 28 GHz auction of$0.011/MHz-pop and recent mmWave acquisitions ranging from$0.002/MHz-pop(FiberTower)to$0.014/MHz-pop(Straight Path)in 2017.Our$/MHz-pop estimate reflects what we believe to be significant bidding in this band given its largely fallow nature,dominance in other bands(28 and 39 GHz),as well as the better propagation of signals relative to the remaining mmWave bands set to come to market in late 2019(37,39,and 47 GHz).Qualified bidders for the 24 GHz auction include AT&T,T-Mobile,Verizon,Sprint,US Cellular,and Dish.Frontier and Windstream also registered for the 24 GHz auction.Public cable providers did not register for the either the 24 or 28 GHz auctions.Chairman Pai reiterates intention to auction an additional 2.4 GHz of mmWave spectrum bands by year-end 2019.Beyond the recently ended(28 GHz)and soon to begin(24 GHz)auctions,we look for the FCC to bring an additional 2.4 GHz of mmWave spectrum to auction by year-end 2019 across the 37 GHz,39 GHz,and 47 GHz bands.In total,we estimate$8b in auction spend($0.01/MHz-pop)for these spectrum bands particularly in the largely fallow 37 and 47 GHz bands.This is a slight discount to 28 GHz and 24 GHz estimates given the greater availability,higher frequencies,and less developed ecosystem of testing in these bands.Only 31%of the 39 GHz band(417 MHz of availability)is unowned currently with Verizon(40%)and AT&T(27%)largely dominating the band.However,in the 37 and 47 GHz bands,the FCC will auction 1 GHz each.We believe the“greenfield”opportunity in the 37 GHz band coupled with the adjacency to the 39 GHz band as well as consistent band plan allows for large,contiguous spectrum holdings for carriers.C-Band clarity expected by mid-year;continue to estimate$15b of value for proposed 180 MHz.While several notable headlines emerged over the last monthrelated to C-Band Alliances proposed 180 MHz market-based solution,our base case remains the same:final order from the FCC at mid-year and a market-based(CBA led)sale of spectrum as early as late 2019/early 2020 with the spectrum becoming usable in the 2021-2023 timeframe.We estimate total proceeds of$15b for the 180 MHz of airwaves based on$0.25/MHz-pop.Some of the opposition could slow the NPRMs momentum,which wed been leery of for some time,but we believe the FCC has no interest in controlling the auction instead appearing more motivated to expedite time to market.We continue to believe that the C-Band offers a tremendous opportunity for carriers,but struggle with supply/demand dynamics.For Intelsat,we assume net proceeds of$5.8b much of which will be deployed to paying down its debt load.We target a 4-5x post-sale leverage ratio for Intelsat due to the challenged fundamentals across its legacy FSS business(to which we ascribe a negative equity value).Broad support for CBRS spectrum;auction likely slips into 2020.In total 150 MHZ of CBRS spectrum will be brought to market comprised of 70 MHz of licensed(PAL)and at least 80 MHz of unlicensed.Nearly all US carriers have expressed interest in the 3.5 GHz band and are in the process of conducting field tests.Given some of the limitations in the band such as county-level licenses,exclusion zones,incumbent priority,as well as limited outdoor propagation,we believe cable could be more interested in this band than telcos.As MSOs delve further into wireless,cable operators could use CBRS to offload MVNO traffic onto an underlying small cell infrastructure as Charter outlined its ex-parte filings with the FCC.We assume$0.15/MHz-pop for the CBRS spectrum band or$3.4b total across 70 MHz nationwide.3North America Equity Research14 March 2019Philip Cusick,CFA(1-212)622- Upcoming Auctions and Estimated PricesTable 1:3GPP 5G/NR Bands5G/NR-below 6 GHzBandFrequencies(MHz)Bandwidth(MHz)Duplex Moden773300 420010-100TDDn783300 380010-100TDDn794400 500040-100TDDn801710-1785/N/A5-30SULn81880-915/N/A5-20SULn82832-862/N/A5-20SULn83703-748/N/A5-20SULn841920-1980/N/A5-20SUL5G/NR-mmWaveBandFrequencies(GHz)Bandwidth(MHz)Duplex Moden25726.5-29.550-400TDDn25824.25-27.2550-400TDDn26037.0-47.050-400TDDTBD37.0-43.550-400TDDSource:3GPP,Ericsson.As we outlined in our recent spectrum primer,an abundance of spectrum is expected to come to market across the US over the next several years.This past November,the FCC began to auction(Auction 101)the remaining 28 GHz licenses(850 MHz total)on a county basis which closed on January 24th total proceeds reaching$703m($0.011/MHz-pop).The FCC plans to begin auctioning(Auction 102)the 24 GHz band(700 MHz total)today March 14th.Beyond that,we expect an additional 2400 MHz of spectrum from other mmWave bands could come to market by 2020 with FCC Chairman Pai hoping to auction these airwaves by year-end 2019(as per recent comments at Mobile World Congress).With the CBRS(3.5 GHz)auction rules now finalized,we look for an auction in 2020.Finally,the NPRM for C-Band was approved at the FCCs July 2018 Open Meeting and has moved through the comment(ended October 29th)and reply periods(ended December 11th).Figure 1:Estimated Auction Spend Through 2021 Source:FCC,J.P.Morgan estimates.While the timing and outcome of the C-Band NPRM is unclear and some limitations exist within the 3.5 GHz band,carrier interest coupled with the sizable amount of mid-band spectrum coming to market may pose a threat to the desirability of Dishs existing mid-band holdings and others(Globalstar,Ligado,etc.).However,we acknowledge that Dishs 70 MHz of mid-band spectrum represents 20%of all mid-band held currently and most of the fallow spectrum in those bands,and could command a premium to higher bands both because of its wider propagation and better penetration of buildings,as well as because most of that spectrum is usable today on existing network assets rather than needing to wait for ecosystems and standards to be created in newer bands.With 180 MHz of C-Band likely coming to market and up to 70 MHz of CBRS to be licensed in each county(as well as an additional 80 MHz of“unlicensed”spectrum),wireless carriers have a path to additional network relief/capacity in the next few years.As a result the amount of spectrum coming to market over the next several 28 GHz24 GHzCBRSC-Band37 GHz39 GHz47 GHzTotalMHz-pops(billions)62.1218.322.858.5325.0135.7325.01,147.3Estimated$/MHz-pop$0.01$0.02$0.15$0.25$0.01$0.01$0.01Estimated Value(millions)$703$4,366$3,413$14,632$3,250$1,357$3,250$30,9694North America Equity Research14 March 2019Philip Cusick,CFA(1-212)622- years coupled with additional bands(EBRS,unlicensed 3.45-3.55 GHz)the FCC is exploring,the value of currently in use and fallow mid-band holdings could be impacted.Auction 101(28 GHz)Ended January 24th,More mmWave to ComeIntroductionAuction 101,of 24%of the 28 GHz band,began on November 14thand ended January 24that total proceeds of$703m(minimum bids of$41m)or$0.011/MHz-pop.In total,62b MHz-pops was auctioned across the 28 GHz band over 176 rounds of bidding.There was limited spectrum available,particularly in the top 50 markets,as the band is already dominated by Verizon and we had expected a rather quick 28 GHz auction.Prior to the auctions close,we had estimated potential proceeds of$755m for the 28 GHz band or$0.012/MHz-pop.The FCC will not reveal winning bidders until after the close of Auction 102 bidding(likely in late May or early June).Beginning today,the 24 GHz band will be auctioned in seven 100 MHz blocks or 218 MHz-pops total across the US.Since the 24 GHz band is largely fallow and available on a larger geographic basis(PEA vs.county for 28 GHz),we look for more significant carrier demand and would expect the auction to take longer than Auction 101.In total,we estimate potential proceeds of$4.4b for this band or$0.02/MHz-pop clearing price.This compares to minimum opening bids of$0.0013/MHz-pop set by the FCC($294m in total proceeds).BackgroundIn 1997,the FCC made 1300 MHz of LMDS(Local Multipoint Distribution Service)spectrum,or 28 GHz,available in each BTA across the US comprised of a 1150 MHz“A Block”and 150 MHz“B Block.”In the 2016 Spectrum Frontiers plan,the FCC authorized mobile operations in the A1 band(850 MHz)of the LMDS A Block(27.5-28.35 GHz).The FCC,in 2016,also proposed to use counties as the license area size rather than BTAs,the previous license area size.The band plan iscomprised of two 425 MHz blocks.Existing A1 license holders received licenses for both the upper and lower 425 MHz channel blocks.Table 2:mmWave Spectrum AvailabilityTop 50 MarketsNationwide24 GHz100%100%28 GHz2%24%37 GHz100%100%39 GHz22%31%47 GHz100%100%Total61%67%Source:FCC,J.P.Morgan estimates,T-Mobile.Current 28 GHz spectrum holdersThe FCC notes that of the 986 designated licenses(493 BTAs x 2 licenses per BTA),412 areas have active licenses covering approximately 76%of the population today.The FCC began the 28 GHz auction November 14thfor the remaining 24%of the population or 63b MHz-pops(74m pops*850 MHz)which ended on January 24th.The 28 GHz Auction cleared at$0.011/MHz-pop despite lower than average geographic quality5North America Equity Research14 March 2019Philip Cusick,CFA(1-212)622- The auction cleared at$0.011/MHz-pop or$703m total which compares to our estimate of$755m heading into the auction.Our estimate was based on$0.012/MHz-pop slight premium to the simple-average of recent mmWave acquisitions.This is well above the FCCs average minimum opening bids of$0.00065/MHz-pop($41m in total proceeds).Minimum openings bids were lower than recent mmWave transactions,but did not surprise us since most major markets are held by incumbents with the licenses at auction skewing rural.Using FiberTower($0.002)and Straight Path($0.014)$/MHz-pop acquisition ranges resulted in estimated total auction proceeds between$140m to$880m.Given Verizons dominance in this band,we assumed they would attempt to buy-in the remaining licenses nationwide which they do not own.However,it looks like another bidder actively bid at the auction driving prices higher.Table 3:Current 28 GHz Licensees and AvailabilityMHz-POPs(000s)Average MHz NationwideVerizon218,188,812 679 T-Mobile121,464,880 378 DISH 11,380,283 35 Sprint605,524 2 Auction 10162,879,745201Source:FCC,J.P.Morgan estimates.The major holders of 28 GHz,prior to the auction,include Verizon(218b MHz-pops)and T-Mobile(121b MHz-pops)which hold an average of 679 MHz(one or more licenses across all of the country)and 378 MHz nationwide(one license across about half of the country),respectively.Verizons holdings are comprised of 173b and 45b MHz-pops acquired through NextLink and Straight Path,respectively.Across the top 50 markets,Verizon owns an estimated 76%of spectrum while T-Mobile holds 12%.Verizons nationwide holdings across the 28 GHz band account f