The final numbers are in and, as expected, Verizon, AT&T, and T-Mobile US won the lion’s share of mid-band spectrum in the 3.7 GHz-3.98 GHz band that was up for auction. The trio of nationwide operators are on the hook for nearly 96% of all spending in the C-band auction that ended last month at a record high of $81.17 billion.

Verizon won 56% of all licenses up for auction (by winning bid value) to the tune of $45.45 billion, AT&T followed with 29% of C-band spectrum licenses at a cost of $23.4 billion, and T-Mobile US plunked $9.34 billion on 11.5% of the mid-band licenses made available by the Federal Communications Commission (FCC). 

Paying these bills to the federal government will cause considerable financial strain on all three operators with each assuming major debt that could hamper or otherwise delay 5G deployments. Spectrum is a critical and finite resource for mobile operators, and 5G operators can’t establish a robust network without it, but the financial realities of this spectrum investment are bound to impact other activities for many years to come. 

Analysts at MoffettNathanson said the auction will cause “lasting damage” to the balance sheets of all three nationwide operators, especially AT&T and Verizon. “Overspending in the auction — we make no judgment here about the intrinsic worth of the spectrum, only the financial sustainability of balance sheets in light of the money that was spent for it — will impair some carriers’ ability to invest in bringing 5G services to market,” the analysts wrote in a report.

Verizon said it secured a pair of loans totaling $25 billion that are due in full one year after funding, and that still leaves another $20.5 billion to be paid. AT&T reportedly approached a group of banks last month to borrow $14 billion, which leaves a remaining $9.4 billion to be paid. 

Verizon and AT&T both spent more than analysts at MoffettNathanson anticipated. “We think they emerge from the auction badly diminished,” the analysts concluded.

The total amounts collectively, and for each of the big three carriers independently, are equivalent to massive mergers or acquisitions. 

T-Mobile US, which still invested heavily in C-band spectrum, avoided forking over significantly more money largely due to the vast trove of nationwide 2.5 GHz spectrum it acquired by merging with Sprint last year. Indeed, the entirety of mid-band spectrum put up for auction was only slightly larger than what T-Mobile US already owned heading into the auction.

The operator’s merger with Sprint, at an effective cost of $21.5 billion and an additional assumption of roughly $37 billion of Sprint debt, netted the operator arguably more valuable spectrum and about 29 million customers. Moreover, it emerged from the C-band auction with more mid-band spectrum than its competitors.

T-Mobile US is the “true winner,” according to MoffettNathanson, which added that the operator still has the “industry’s best spectrum position, but now with a balance sheet advantage as well.”

The financial burdens willingly accepted by all three nationwide operators are also significant compared to their capex (excluding spectrum), profits or losses, and total revenue in 2020. The collective capex of the nation’s three largest operators in 2020 was just 55% of the total amount the trio spent on C-band spectrum licenses.

AT&T’s 2020 capex came in at $15.6 billion and it reported a loss of $5.2 billion on $171.8 billion in revenue. Verizon spent $18.2 billion on capex in 2020, and banked $18.3 billion in net income of $109.9 billion in revenue. T-Mobile US’ total capex in 2020 landed at $11 billion and it reported $3 billion in net income on $68.4 billion in annual revenue.

Dish Network, an aspiring greenfield open radio access network (RAN) operator that has yet to activate 5G service in a single market, spent a surprisingly low amount of just $2.5 million in the auction. The satellite-TV company, prior to the C-band auction, has cumulatively invested or financed at least $26 billion in wireless-related assets (mostly spectrum) since 2008. 

Regional carrier U.S. Cellular walked away from the auction with spectrum licenses costing a total of almost $1.3 billion. 

The expectations U.S. operators set and continue to promote for 5G, compounded by the financial burdens absorbed in the C-band auction, place even greater pressure on all nationwide operators, but especially AT&T and Verizon, to build yet-to-be-seen services and specialized use cases that actually delivery significant new revenue from 5G.

Enterprise adoption of 5G is now an imperative for all three of the country’s nationwide carriers.