Analyst: AT&T may opt out of incentive auction due to Time Warner deal

AT&T may no longer be looking to spend much in the incentive auction of 600 MHz spectrum now that it has agreed to fork over $85 billion to acquire Time Warner. And that would likely mean that the auction won’t raise nearly as much money as had been expected.

The nation’s second-largest mobile network operator announced over the weekend that it has agreed to buy Time Warner in a blockbuster deal to expand its digital media empire. The move comes as AT&T prepares to launch DirecTV Now, a mobile-focused, over-the-top (OTT) offering in an effort to leverage the 2015 $49 billion acquisition of the satellite TV provider. Interestingly, the announcement came just a few days after Stage 2 of the incentive auction of TV broadcasters’ airwaves ended abruptly after a single round, surprising analysts and other onlookers who expected the second stage to last two weeks or more. Stage 2 generated only $21.5 billion in bids, falling far short of the $54.6 billion that would have ended the event. The unexpectedly truncated round led some analysts to suggest that one bidder that had been looking to buy spectrum nationwide may have put its wallet back in its pocket, essentially walking away from the event. And Tim Farrar of TMF Associates took that scenario one step further, suggesting Comcast – which had been expected to spend roughly $5 billion or $6 billion at auction – might have opted out, choosing to focus primarily on the MVNO agreement it activated with Verizon last year rather than investing heavily to acquire its own spectrum licenses.