Investments backed by spectrum value are inherently volatile. Historical transactions illustrate that estimates based on generalized average values have produced wildly inaccurate analysis, models and turbulent trading ranges.
This is not likely to change for quite some time to come.
In spending a good part of the past 15 years creating valuation models, scenario probabilities and working through auction/transaction theories, it’s clear that context is by far the critical driver of value. Every spectrum transaction is highly unique, distinct. Although patterns emerge and persist over varying periods of time, among the core components to accurately assessing worth of airwaves are:
- Ecosystem – Deployment, Infrastructure, handsets, Interoperability
- Technology – Air/surface interface, spectral efficiency, compatibility
- Regulatory – spectrum caps, usage waivers, permitted uses, competitive concerns
- Number of capable and willing buyers/bidders
- Demand Drivers – Handset/device use cases (cars, home, mobile, healthcare, mobile, fixed)
- Geography/Topography – Terrain, coverage, harmonization with existing spectrum assets regionally, nationally and globally
- Capacity – Densification or primary coverage
- CapEx Implications of band, synergies
- Antenna site availability, propagation characteristics
Collectively, these factors have accounted for transaction variances that range upwards to 400% of “traditional” band value estimates. Recent examples include:
- DISH
- LightSquared (Ligado)
- Globalstar
- Sprint
- TV Broadcaster Portfolios
Definitively more accurate, precisely- defined valuation ranges are possible by modeling spectrum value using disciplined, industry-centric methodology that provides critically needed context. This greatly narrows the upper and lower RANGES of potential valuation – thereby significantly lowering exposure to excessive, volatile trading ranges.
