WASHINGTON-The pack leaders haven’t changed much during the last week of bidding in the Federal Communications Commission’s local multipoint distribution services auction. The top 10 companies remain the same, although the order shifts for one or two companies every few rounds. This behavior, coupled with declining new bids and new high bids, could signal that this sale could be over sooner than expected-perhaps within five to 10 days.
As of Round 65, net revenues rose to $568.7 million, with 72.8 percent attributed to sales of A-block properties and 27.2 percent to B-block properties.
“There is not enough room to go much higher than about $572 million,” said Taylor Simmons of Simmons Associates. “The revenues continue to be well below the value of the licenses, so that’s good news for auction winners.”
Prior to the auction’s start, there had been talk that if LMDS licenses did not bring in more than $1 billion, the auction would be deemed a failure. The Strategis Group valued the licenses at approximately $4 billion. However, worth is in the eye of the bidder.
The buzz around the industry is it is a good thing the FCC decided to implement minimum bids, in that WNP Communications Inc., the consistent front runner, has the high bids on 40 licenses as of Round 65 last Thursday, and that more than 20 of those markets have not registered a counter bid in 40 rounds. “There is no competition, and there is no auction,” one source said. According to one roster obtained by RCR, A blocks in 181 markets had received only one bid from anyone as of Round 53, and 124 A blocks had received no bids whatsoever.
WNP has committed $186.8 million to the auction thus far, and its closest competitor, Nextband Communications Inc., holds 45 high bids at a cost of $136 million. The two are closer, however, in the number of pops covered-105 million vs. 98.6 million, respectively. The rest of the top 10 bidders include WinStar LMDS L.L.C., Baker Creek Communications, Cortelyou Communications, BTA Associates, Alta Wireless Inc., Eclipse Communications Corp., CoServ L.L.C. and U S West Communications Inc.
Simmons said WNP and the others had tried last week to leverage their remaining eligibility, with WNP finally bidding on Greenville, S.C., and “nibbling” at West Palm Beach.
“This auction is a real good deal for winners, and a really good deal for the big winners,” Simmons added. “Nextband is paying $2 and $3 for pops that could be worth $20.”
Despite the fact that revenues may not make projection, Simmons pointed out that the Wireless Communications Services auction last year was “a bonanza” and a “gold rush” for those that participated, and it may have lifted the veil of tears that surrounds the C-block personal communications services auction. In terms of LMDS final results, Simmons said, “This auction may help to restore even more faith in the auction process for upcoming entrepreneurs, who now see that they may be able to get into the wireless industry for a $30-million to $50- million initial commitment.”
