The broadcast spectrum auction in the U.S. in March 2016 will surge to $60 billion if non-traditional bidders such as cable multiple system operators and technology companies participate, according to Moody’s.
Recently, SoftBank-owned Sprint said it will not participate in the 2016 spectrum auctions.
Moody’s said merger and acquisition activity in the U.S. has been high in 2015, while spectrum auction will dominate the wireless sector spending activity next year.
The report said the US telecom sector will continue to grow in 2016, with wireless growth offsetting the decline in wireline revenues.
Increased competition among the four major wireless carriers – AT&T, Verizon, T-Mobile and Sprint — will hinder any meaningful rise in wireless margins, says Moody’s Investors Service.
The rating agency maintains its stable outlook on the U.S. telecom sector. Wireless subscriber growth in smartphones and tables will offset flat-to-negative wireline revenue growth.
“Growth in mobile video, higher network speeds, the availability of equipment instalment plans and the expansion of M2M connections will continue to fuel wireless growth, which is the backbone of the telecom industry,” said Dennis Saputo, senior vice president at Moody’s.
AT&T, Verizon, T-Mobile and Sprint will invest in expanding and maintaining their networks. Moody’s said that this level of investment or Capex program should continue for several years as smartphones and tablets use increasing amounts of data.
AT&T last week said its investment in telecom infrastructure will grow in the third quarter of 2015 as compared with the second quarter. AT&T primarily focuses on investing in 4G LTE infrastructure.
Wireline operators will focus on cutting costs in response to shrinking margins as they replace high-margin legacy revenues with lower-margin services.
Image source: ICICI Bank