Telco Chatter Jun 24: SFR workforce, US AWS3/C-band auction, ASTS/RAKUTN JV

Research evidence excerpt

Telco Chatter Jun 24: SFR workforce, US AWS3/C-band auction, ASTS/RAKUTN JV

enabling “market repair.” (2)

Rich headline valuation: Deal implied ~9x EV/EBITDA’20E vs peers trading at ~4.5x, but

~3.7x on a synergy/margin view, given ~70% incremental EBITDA margins and expected

pricing recovery. (3) Remedies didn’t prevent market repair: Despite a 14-month review,

remedies (tower divestments, roaming, MVNO access, some spectrum secondary-use) still

allowed the consortium to retain core spectrum and cement a 3-player market. (4) Key

impacts (growth, churn, margins): Service revenue returned to real growth as pricing

moved to “more-for-more”. Postpaid churn fell (TIM ~2.1pp 2021–2025; Vivo ~0.1–

0.2pp). EBITDA margins rose as sales and marketing intensity declined. Capex intensity

fell, lifting OpFCF margins. (5) Lessons for other markets: Valuations for acquired assets

leading to consolidation could look high, even if the assets are in distress. Spectrum

distribution matters, as regulators could provide for a new entrant. Improvement in market

dynamics could take quarters after deal announcement. Oi remained very aggressive during

the antitrust analysis process, with improvements starting to appear after the deal was

effectively approved and closed, in early 2022.

US Telcos – AWS-3 auction raises $3.5bn for rip-and-replace

The FCC's AWS-3 spectrum auction (Auction 113) concluded with total winning bids

exceeding $3.5bn after 72 rounds, surpassing expectations and the $2.9bn threshold set for

the event. All 200 licenses received bids from 17 qualified participants, including AT&T, T-

Mobile, Verizon and EchoStar. The auction proceeds will allocate up to $3.3bn to fund the

FCC's "rip-and-replace" program and other Department of Commerce initiatives. EchoStar