AT&T Gets FCC Nod

In order to boost 4G LTE markets in the U.S. as well as to free up the nations under utilized spectrum, Federal Communications Commission (FCC) has approved AT&T Inc. (T - Analyst Report) – the second-largest wireless carrier in the country to buy Wireless Cellular Service (WCS) and Advanced Wireless Service (AWS) spectrum bands from four companies namely, Comcast Corporation (CMCSA - Analyst Report), NextWave Wireless Inc. (WAVE), San Diego Gas & Electric Co. and Horizon Wi-Com LLC.

Higher usage of smartphones and tablets coupled with limitation of spectrum are continuously putting huge pressure on AT&T’s network. So, in a bid to improve its spectrum shortage the company planned to acquire T-Mobile USA – the third largest carrier in the country. However, the deal failed to get FCC approval as it might give rise to unhealthy competition across U.S. telecom industry.

While at the same time Verizon Wireless, which is the largest telecom operator of the nation is continuously expanding its 4GLTE markets. At present, Verizon Wireless has more than 470 4G LTE footprints as compared to AT&T’s 125 4G LTE markets.

In order to expand its 4G LTE coverage as well as to catch up with the nation’s largest carrier, AT&T is aggressively buying spectrum of 2.3 GHz band from these companies which holds unused AWS and WCS spectrums. Acquisition of these spectrums will allow AT&T to bring at least 82% of the country’s population under its radar, covering nearly 48 states.

We maintain our long-term Neutral recommendation on AT&TInc. Currently, it has a Zacks#3 Rank, implying a short-term Hold rating on the stock.