US telecoms operator AT&T bought Qualcomm’s lower 700MHz D and E Block unpaired US spectrum licenses for $1.925 billion at the end of December 2010.
Paul Jacobs, chairman and CEO of Qualcomm (Pictured), said: ‘This is a positive outcome for Qualcomm and our stakeholders. Carrier aggregation, supplemental downlink and LTE multicast technologies are an exciting evolution of next generation wireless systems to economically support increasing consumer demand for mobile TV and other rich media content.’
AT&T said it intended to use the spectrum as part of its longer-term 4G network plan. It will deploy it as supplemental downlink, using carrier aggregation technology. This technology is designed to deliver substantial capacity gains by enabling unpaired spectrum to be used in conjunction with paired spectrum.
Qualcomm said it is integrating carrier aggregation technology into its chipset roadmap to enable supplemental downlink and intents to market the technology globally. The technology is expected to allow wireless operators to substantially improve their mobile broadband networks by making available unpaired spectrum bands to be used in conjunction with existing paired bands.
Qualcomm plans to develop LTE multicast technologies to address the growing demand for high-bandwidth video and other multimedia content.
Graham Friend, managing director of Coleago Consulting, pointed out that Qualcomm acquired its eight licences at auction for $558 million and has made a return of 244%.
Friend said: ‘The sale is an example of spectrum acquired at auction being subsequently resold at a higher price. It is interesting to contrast this with the 3G auctions of 2000 and 2001 where auction prices were very high and were subsequently written down. It highlights the challenges of valuation.
‘The valuation work would have been performed at the end of 2006 and early 2007 – before mobile broadband had really taken off and mobile operators may well have developed conservative business plans following the learning from the 3G auction. Now that the mobile broadband market is growing rapidly the value of spectrum has been dramatically re-appraised upwards,’ he added.
The sale is subject to a number of conditions including approval by the US Federal Communications Commission and clearance from the US Department of Justice. A close of sale is anticipated during the second half of 2011.