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Wireless auction recap: AT&T's search for funds

Jan. 31, 2015 2:17 PM ETAT&T Inc. (T) StockTBy: Jason Aycock, SA News Editor23 Comments
  • While Dish Network had the most strategically interesting outcome in the FCC's wireless spectrum auction, AT&T (NYSE:T) dropped the biggest bomb, with its $18.2B bid package surpassing the auction's reserve price all by itself.
  • The high bid for a single license: about $2.8B for a primary New York license, won by AT&T.
  • AT&T's challenge now: With about $4.5B in the bank, and $18.2B due to go to the FCC by March 2, the telecom giant will need to scramble a bit for funds.
  • The company displayed confidence via a statement about its bid: It "expects that with this spectrum investment and other pending acquisitions, in the near term it may go above its 1.8x net-debt-to-EBITDA target. The company will use excess cash — after paying its dividend — over the next three years to pay down debt, and expects to return to historical debt ratios."
  • It's not just the auction bid that's changing AT&T from a low-leverage investment to a high-leverage one; a $49B acquisition of DirecTV (NYSE:DTV) and its purchases of Mexico's Iusacell and Nextel are putting pressure on its purse (and possibly its single-A rating). AT&T recently entered into $11B in credit pacts.

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