Sprint revealed that it is going to skip the highly anticipated spectrum auction next year, citing the fact that it holds enough spectrum to carry out upgrade plans and keep up with the competition without the need for any additional spectrum. This announcement came in on Saturday, making Sprint the first large carrier to opt out of the auctions. Sprint is in possession of a large part of the spectrum, even though it's in the higher frequency range, which Sprint notes, will be more than enough for the company.
According to Sprint CEO Marcelo Claure's statement, Sprint's immediate objective is on improving its network and market position to keep up with the competition with the other three major carriers, namely Verizon, AT&T and T-Mobile. Sprint holds the fourth position in the carrier race, and the competition is fierce with its competitors offering deep discounts and offers. The U.S. Federal Communication Commission is preparing to auction the 600 MHz which can travel long distances and penetrate walls better, making it a very favorable choice for carriers trying to satisfy the increased network and bandwidth demands. The American Telecommunication Holding company is believed to focus on three to five markets instead of trying to expand the tri-band LTE Sprint Spark service. Sprint Spark uses the 2.4 GHz spectrum acquired from Clearwire, but it only works with special equipment in select handsets.
Sprint also skipped the last airwave auction AWS-3 that was held last year, and in that announcement, it had announced plans to participate in the 600 MHz auction. Investors are expression concerns about the health and viability of the company as it struggles to make profits in the face of severe competition from the major players in the market. According to reports, the company spent $2.2 billion in cash in the second quarter which ended on June 30th. Marcelo attempted to alleviate the concerns clouding the future the Sprint, stating that the company does not need any additional spectrum and possesses enough spectrum to be holding their ground in the future. It is also in the process of a network upgrade that will sharply improve data speeds for its customers.
The carrier has not turned in annual profit since 2007, and earlier this month, Moody's downgraded Sprint's credit rating two notches, losing confidence in the carrier. Sprint's announcement also gives its competitors better odds at the auction provided they are ready to spend enough to buy the precious spectrum from TV broadcasters. The company is going through tough times as it was recently under fire from the FCC for an amount of $1.2 million for 911 outage during a significant part of 2014.