With the U.S. Federal Communications Commission (FCC) resuming spectrum auctions after four years, expectations are rising for stronger results by Korean telecom equipment makers, including Samsung Electronics. In particular, attention is on the fact that Verizon Communications Inc., a key partner of Samsung Electronics, swept the first auction.
According to the industry on the 3rd, the FCC recently wrapped up the AWS-3 spectrum auction covering the 65 MHz band. The total winning bids came to $3.5 billion (about 5.4 trillion won), and Verizon Communications Inc. spent about $3.2 billion (about 4.9 trillion won). T-Mobile spent $278 million (about 430 billion won), AT&T spent $121 million (about 190 billion won), and SpaceX also invested $8.5 million (about 130 billion won).
The FCC said, "The auction ended very successfully, recording a winning amount that exceeded expectations," and added, "The FCC will complete bidding for at least 100 MHz of upper C-band spectrum by July 2027." The FCC is preparing auctions totaling 160 MHz, exceeding the statutory minimum of 60 MHz.
This spectrum auction was the first held after the FCC regained its auction authority with the enactment of the One Big Beautiful Bill Act (OBBBA). The FCC's spectrum auction authority expired in 2023, but it was restored through OBBBA through 2034. The current auction covered a total of 65 MHz, and under OBBBA the FCC plans to supply a total of 800 MHz of spectrum through 2034. The Congressional Budget Office (CBO) estimates the spectrum auctions through 2034 will generate more than $85 billion (about 130 trillion won) in revenue.
Kim Hong-sik, a researcher at Hana Securities Research Center, said, "It is significant in that it opened the first round of a long journey to allocate 800 MHz of spectrum, the most since the FCC's founding," and added, "From the first auction, the momentum is evident, giving reason for optimism on telecom equipment stocks."
In this auction, it is notable that Verizon Communications Inc. accounted for most of the total winning amount. Because Verizon Communications Inc. is a key partner of Samsung Electronics, there was interest in whether Verizon Communications Inc. would actively participate in the auction. In 2020, Samsung Electronics signed a 5G (fifth-generation mobile communication) equipment supply contract worth about 7.9 trillion won with Verizon Communications Inc., which became the largest winner in the U.S. spectrum auction. Verizon Communications Inc. CEO Dan Schulman announced early this year that this year's capital spending budget would be $16 billion (about 24.5 trillion won), saying investment would be reduced from the previous year, leading to expectations that Verizon Communications Inc. would not actively participate in the auction, but in reality it spent the most money.
Researcher Kim said, "Although Verizon Communications Inc. is still holding back on talk of expanding capital expenditure for 5G SA (standalone mode) and 6G (sixth-generation mobile communication), if it secures spectrum it is highly likely to unveil concrete investment plans," and added, "Starting this year, the United States began applying a strong regulation that does not grant radio certification to products using Chinese-made parts, so Samsung Electronics is highly likely to be selected as a Verizon Communications Inc. vendor."
If Samsung Electronics increases equipment exports, domestic telecom equipment makers' sales could rise in tandem. That is because the value chain of domestic telecom equipment makers is highly dependent on Samsung Electronics. There is also talk that, due to U.S. restrictions on Chinese-made parts, domestic telecom equipment makers could newly supply or expand volumes not only to Samsung Electronics but also to Ericsson and Nokia. Domestic component partners of Samsung Electronics' Networks Business include KMW and RFHIC.
However, because this auction was a reauction supplying licenses repossessed due to nonpayment from the 2015 auction, it served to partially supplement carriers' region-by-region spectrum portfolios, so it is worth watching the next upper C-band spectrum bidding, which will be a nationwide new spectrum auction.