By Drew FitzGerald
As bids in an unexpectedly hot auction for U.S. wireless
spectrum topped $36 billion Monday, carriers went about issuing
billions of dollars in debt for when the time comes to pay for
it.
Verizon Communications Inc. on Monday outlined plans to raise
2.4 billion euros in debt citing spectrum as a use of the funds.
Smaller carrier U.S. Cellular Corp. said it plans to raise up to
$500 million in new debt to pay for spectrum purchases among other
purposes. Chief Executive Kenneth Meyers said the company's
existing financial resources, though strong, "may not be sufficient
to fund all of the long-term investments that the company is
making."
The moves came after AT&T Inc. last week offered 3.8 billion
euros of bonds earmarked for general corporate purposes, and
satellite broadcaster Dish Network Corp., which registered for the
auction, wrapped up a $2 billion debt offering.
Companies seeking a piece of the new spectrum will need to line
up extra cash in advance. Winning bidders will owe a 20% down
payment on their new licenses by Jan. 7 or 10 days after the
auction ends, whichever is latest. Final payments are due the later
of Jan. 21 or 10 days after down payments come due.
The now-record auction has turned into a surprise windfall for
the government, as carriers aggressively bid to line up the
airwaves they'll need to cover booming demand for wireless Internet
as Americans watch more videos, stream more music and spend more
time surfing the Web on their phones and tablets.
AT&T's shares slid 1.6% to $34.70 Monday, as investors
braced for more spending. Verizon's shares fell 1.4% to $49.50.
Shares in Dish, which owns licenses for a swath of spectrum similar
to what the government is offering, climbed 3.2% to $76.05.
"You have more spectrum, and you need to spend more to use the
spectrum that you've spent billions to buy," said Wells Fargo
analyst Jennifer Fritzsche said. "Something's got to give."
Write to Drew FitzGerald at andrew.fitzgerald@wsj.com
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