News of the Federal Communications Commission’s plan to delay the auction of 700 MHz spectrum from March to September, caused a slight panic for shareholders of Nextel Communications Inc. stock last Wednesday who saw the announcement as bad news for the carrier.
The companies stock dropped from a daily high of $38.63 per share to close at $34.31 after the announcement mid-day. More than 12 million Nextel shares traded hands, well ahead of the average 9.8 million shares traded. Nextel was expected to be a big player in the 700 MHz auction since it decided to pass up the FCC’s recent auction of 1.9 GHz personal communications services licenses.
Analysts were somewhat confused with the sell-off of Nextel stock, noting the carrier supported the delay, along with Verizon Communications and the Cellular Telecommunications and Internet Association.
“Would a company supposedly spectrum deficient request to delay an opportunity to pick up some useful spectrum? We do not think so, and so conclude that the spectrum is not as useful as currently positioned,” said ING Barings in an analysts note.
ING Barings noted its valuation of Nextel shares remained attractive, saying investors should focus on the company’s current value instead of spectrum for next-generation services.
