SBAC Falls After AT&T Acquired More Spectrum from EchoStar
Summary
- AT&T’s $23B spectrum acquisition from EchoStar is tower-focused, not satellite-driven, and reinforces rapid deployment of mid- and low-band spectrum.
- This deal seems unlikely to cause damage to tower REITs like SBAC, as AT&T’s expansion of fixed wireless home internet should increase demand for cell towers.
- Bank of America’s downgrade of SBAC does not represent the fundamentals of this event; SBAC’s fundamentals remain strong with improved leasing guidance and signed contracts.
- I maintain a Strong Buy on SBAC and recently added to my position.
- Disclosure: Long SBAC.
AT&T (T) announced a deal with EchoStar (SATS) to acquire spectrum. This is not a deal to lease from EchoStar. It does not suggest any move towards focusing on satellites. If anything, commentary from management reinforced an emphasis on rapidly deploying spectrum as efficiently as possible. That means towers, not satellites.
The Transaction
These are the terms:
- AT&T will pay $23 billion.
- The press release from AT&T highlights that AT&T will provide some services under the Boost Mobile brand. No details provided. On the investor call, AT&T management highlighted the importance of having this as an additional source of revenue. Boost Mobile has typically gone through the network owned by T-Mobile (TMUS).
- AT&T will acquire about 30MHz of 3.45 GHz mid-band spectrum (great for towers).
- AT&T will acquire about 20 MHz of 600 MHz low-band spectrum (probably mostly for use with towers).
Other Things To Know
- The press release from EchoStar states the transaction is part of their efforts to resolve inquiries from the FCC (Federal Communications Commission).
- Neither press release mentions any leasing.
- Neither press release mentions satellites.