AT&T CEO John Stankey admitted the carrier paid a premium for EchoStar’s wireless spectrum, a haul that includes a cache of low-band licenses that do not specifically align with AT&T’s near-term deployment plans.

AT&T late last month boldly signed a deal to acquire a substantial spectrum haul from EchoStar for $23 billion. That haul included 30-megahertz of nationwide 3.45 GHz mid-band spectrum and approximately 20-megahertz of nationwide 600 MHz low-band spectrum in an all-cash transaction.

However, some analysts noted that AT&T’s purchase price was a $7bn premium over what the firm had in terms of value for those licenses.

AT&T CEO John Stankey admitted that it was high, but was basically the price of doing business.

“I'm well aware that what we're paying is more than what Dish paid for spectrum at auction, but that's not a new and startling fact,” Stankey said during a conference call following the deal’s unveiling. “There are speculators who go in and buy spectrum all the time and hold it for a number of years and then ultimately come back in and sell it for more than what they bought it for, and that's the nature of auctions and what occurs.”

The EchoStar deal aligned with Stankey’s comments during the carrier’s most recent earnings call, where he stated the carrier would continue to look at spectrum acquisition opportunities.

“If something pops up, we have the opportunity within our capital structure today to go and take advantage of that while at the same time honoring the commitments we've made to our shareholders and ensuring from the plans that we're in place on it, not moving off of those or changing it,” Stankey said. “And that's why we engineered at the level we engineered at, and I think that's what you should take forward.”

Stankey during that earnings call also touted that AT&T expects to see up to $8bn in tax savings over the next three years, with up to $2bn of that in 2025, and up $3bn in each of the next two years. The executive noted that these tax savings, combined with other “pro-investment” policy moves, have set the telecom industry up for significant financial growth.

“I've not seen the situation where those tailwinds were all aligned as strongly as they are anytime in my career as they are right now. And I’m surprised I don’t see more commentary on that,” Stankey said. “I would even say the alignment of those policy things that are going on right now in the direction that's occurring, the lack of friction in getting some changes done is even more significant than when the Telecom Act of [1996] was passed.”

Stankey explained that the carrier would be putting some of that expected tax windfall back into its network to the tune of $3.5bn to accelerate its fiber internet build. That build is a significant driver for AT&T’s ongoing operations.

AT&T’s spectrum plans

Despite the admitted high price tag for EchoStar’s spectrum, AT&T’s management did note that it expects a quick turnaround on deploying the vast 3.45 GHz mid-band spectrum it’s acquiring, with most of that geared toward bolstering its 5G network capacity in support of fixed-wireless access (FWA) services. That’s a service offering Stankey has traditionally downplayed, but one that is now increasingly in focus due to the influx of new spectrum capacity.

“We view fixed wireless as a continued great opportunity for us for the right customer segments,” Stankey said during the briefing. “As I said previously, there are a lot of businesses out there where it's a great fit, especially for a converged offer. It's effectively a mobile business. It needs some kind of a scaled fixed solution, and given the usage characteristics, this is really, really good. There are also segments in the consumer space that make a lot of sense. And this opens up just a bigger footprint in places where we maybe had to be a little bit more cautious.”

Stankey has repeatedly targeted the carrier’s Internet Air FWA product as a fill-in or stepping stone toward AT&T’s fiber footprint. However, the Internet Air has seen a strong uptick in growth since it was slowly rolled out beginning in mid-2023, surpassing one million connections during the most recent quarter.

“We win at the top with fiber because it's a better product, and we take share and we can play at the bottom with a price sensitive offer,” Stankey said during the carrier’s most recent earnings call, of its dual-approach to broadband.

However, the haul of low-band 600 MHz licenses may take longer to deploy.

Stankey explained that the carrier does not currently support 600 MHz spectrum bands on its network, with most of its sub-1 GHz deployment centered around the 700 MHz and 850 MHz bands. This includes open radio access network (RAN) infrastructure equipment that is being deployed as part of AT&T’s multibillion-dollar open RAN modernization effort.

“I don't really expect that our current modernization that we're doing for open RAN is going to necessarily directly correlate to the 600 deployment,” Stankey said. “I expect by the time that we have equipment that allows us to do those types of things, we will be mostly through that effort.”

Stankey did add that the network modernization program could provide a base in which further spectrum band support might be supported.

“It certainly provides us some optionality on how we source radios and what we think about moving forward as we buy new equipment,” Stankey said of those open RAN efforts. “But I don't know that the touches and the physical work that we're doing as part of that modernization is necessarily going to lower the labor cost deployment of what we ultimately do to put 600 in the network.”