BTIG research analyst Walter Piecyk recently explained why wireless carrier T-Mobile could be the first to deliver “real 5G” when the idea of such a network becomes a reality. Piecyk wrote T-Mobile’s “deep and unused” low-band spectrum should allow the carrier to deploy 5G before all of its peers.
“T-Mobile should, therefore, be considered a primary 5G investment opportunity for investors whether their acquisition of Sprint is approved or not,” Piecyk wrote.
Piecyk pointed to the fact that new, unused spectrum has often been needed to roll out new technologies, and it’s even more beneficial if that spectrum is low-band because it offers a stronger coverage solution when explaining why T-Mobile is a 5G frontrunner. He also noted that Verizon bought 20 MHz of nationwide low-band spectrum during an FCC auction in 2008 so it could deploy LTE before its competition. T-Mobile and Sprint had to sit out of that auction because they lacked the required funding.
“Those without unused low-band or mid-band spectrum believe millimeter wave spectrum is the answer, but we like many in the industry, are skeptical about that approach for mobile 5G,” Piecyk wrote.
Instead, T-Mobile bought 30 MHz of low-band spectrum in the Incentive Auction of Broadcasters spectrum in 2017 for $8 billion. Piecyk and the BTIG team believe the purchase puts T-Mobile in an enviable position to use the clean, low-band spectrum to roll out 5G-NR faster than other carriers in the industry. Some of BTIG’s reasons for believing so include T-Mobile’s peers have already used most of their existing spectrum for LTE; they’re hoping mmWave spectrum can provide mobile coverage or they’re waiting for Dish, CBRS or C-Band to provide more mid-band spectrum.
“We do not believe that any of those spectrum alternatives can match the speed at which T-Mobile could deliver 5G to the market on its existing low-band spectrum,” Piecyk wrote. “T-Mobile should be the first to market with real 5G and, if the Sprint deal is approved, will have the mid-band spectrum to further solidify their lead.”
Even if the T-Mobile-Sprint merger is not approved, the former is still in position to be the first carrier to market, it would just cost the company more to do so. According to Piecyk, T-Mobile’s low-band spectrum would provide it with a head start on the early 5G rollouts, but it will need more spectrum in order to bolster its 5G offerings over time. Acquiring Sprint would give T-Mobile the mid-band spectrum necessary to add a capacity layer for LTE and 5G-NR. Without Sprint, T-Mobile would need to find a way to gain more mid-band spectrum, and might have to anyway even if Sprint acquisition goes through.
“If the Sprint acquisition is not approved, we estimate that T-Mobile will have to spend $20 billion on spectrum within the next two years,” Piecyk wrote. “In a 5G world, we believe more spectrum will mean more revenue. We think the most attractive spectrum band for T-Mobile to acquire would be Dish’s Band 66, which offers 50 MHz of additional spectrum. We believe that is worth $20 billion.”