The financial analysts at Wells Fargo predicted that AT&T(NYSE: T) will outspend its rivals on licenses during the FCC's incentive auction next year of TV broadcasters' 600 MHz spectrum, dropping up to $10 billion on a 2x10 MHz block of spectrum with nationwide capability. The analysts predict T-Mobile (NYSE:TMUS) will come in second with bids of up to $8 billion, while Verizon (NYSE: VZ) will clock in last among the nation's largest wireless carriers with a total of $5 billion in bids.

As the Wells Fargo analysts point out in their latest report on the incentive auction, AT&T initially pledged to bid at least $9 billion in the incentive auction, but when the carrier made that pledge it was still in the process of acquiring DirecTV. The Wells Fargo analysts said that, since the close of its DirecTV acquisition earlier this year, AT&T has backtracked from that pledge.

Nonetheless, the analysts point to recent statements on the auction from AT&T CFO John Stephens that "We would expect to participate. … Certainly, getting nationwide opportunities is what we've talked about in the past. The 2x10 nationwide capability is something that works very well with our network planning and our network team, but we will see how this develops."

AT&T was the biggest spending during the FCC's recent AWS-3 spectrum auction, dropping $18.2 billion on those licenses.

For their part, T-Mobile executives have been very clear in their intention to participate in the auction. Company executives in recent weeks have said they could have up to $10 billion to spend on the auction, and that the company's primary goals include fleshing out its nationwide coverage in low-band spectrum and improving its spectrum holdings in some top markets. "TMUS has already raised $4B in pre-funding, with plans to raise another $2B closer to the auction date," the Wells Fargo analysts said. "We estimate that TMUS will spend $8B in the auction, which equates to 3.6x net leverage as of YE2016. This compares to its leverage ratio of 3.2x as of the end of Q3'15."

As for Verizon, Wells Fargo said the operator has the credit to spend up to $10 billion in the auction, but that Verizon will likely spend around half that. "Similar to what T has said publicly and based on our conversations with spectrum experts, we look for VZ to contribute in a meaningful way if 2x10MHz bands are made available," the Wells Fargo analysts said.

Sprint has said it will not bid in the auction.

Overall, in its report Wells Fargo predicts the 600 MHz incentive auction will generate total bids of $30 billion to $35 billion -- a figure below the astounding $45 billion generated in the FCC's recent AWS-3 auction but still above all of the other spectrum auctions the FCC has conducted.

Part of what may drive up that price is participation in the auction from so-called "dark horse" players, or those companies that do not currently play in the wireless industry. Wells Fargo pointed to cable companies like Comcast as possible auction dark horses, as well as Google, SoftBank, Dish Network and possibly former Facebook executive Chamath Palihapitiya, who has said he may participate in the event.

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