US C-Band spectrum valuation: $43-$77bn
January 29, 2020
By Chris Forrester
Last week, Eutelsat, in a submission to the FCC, argued that any auction proceeds from the upcoming sale of C-band satellite spectrum should be limited to a total of $7 billion (€6.36bn).
Now, with two independent valuations, the C-Band Alliance (of Intelsat, SES and Telesat) has told the FCC that while the actual valuation cannot be known until an auction is held, one expert valuation suggests that 280 MHz of satellite spectrum should be worth in total between $43 billion and $77 billion (from NERA Economic Consulting).
Evercore Group provided further input on the C-band valuations and analysis on the global data.
Additionally, the CBA has provided the FCC with extremely detailed costs for clearing 300 MHz of spectrum, which it says would be $3.3 billion.
NERA uses as its basis for calculation a comprehensive analysis of the value ‘per MHz Pop’ actually paid in recent international auctions and measured against Purchasing Power Parity (PPP) and also factoring in the profitability of the local wireless industries and license duration.
NERA says that in the telecommunications industry, PPP differences often partially explain differences in ARPUs (e.g., T-Mobile USA’s ARPU is ~$441 vs average ARPUs for Italian operators of $13-16).
The CBA, in its filing with the FCC, says: “The potential significant value of this spectrum must not overshadow the fundamental principle of fairness to its incumbent users. The point is a simple one: if the government determines it to be in the public interest to push out incumbent users who for decades have built their businesses around this spectrum, then fairness and the law dictate these important rights-holders should receive fair value for their efforts in expediting the clearing of this spectrum and making it available far more quickly than would otherwise be possible.”
The CBA filing statement continues: “The Commission allocated the spectrum for the use of fixed satellite services, and the rights are renewed every 15 years with an expectation of renewal in perpetuity. Based on this licensing scheme and over the last 40 years, the CBA companies built their businesses and made long-term contractual commitments to the content companies using their services. In so doing, the CBA member companies have invested more than $50 billion in designing, manufacturing and launching more than 230 U.S.-made satellites and generating tens of thousands of high-paying jobs.”
“Over the last two years, the CBA has greatly assisted the government in determining how to make this transition work. Substantially all of the planning is done, and we are ready to execute. However, we simply do not have the flexibility to proceed unless we are offered the opportunity to share fairly and appropriately in the value being created through our tremendous past and future efforts. We continue to believe such sharing is most easily expressed through a formula directly tied to the actual realized proceeds of any C-band auction,” adds the Alliance.