AT&T Lands Deal To Develop First Responder Broadband Network

AT&T Inc. T announced it has entered into an agreement with the federal First Responder Network Authority (FirstNet) “to build and operate a dedicated national wireless broadband network for police, firefighters and emergency medical services,” Argus’ Joseph Bonner said in a note, while maintaining a Buy rating on the company, with a price target of $51.

Positive Agreement

The analyst believes the FirstNet deal would prove positive for AT&T, although it is not clear whether every state would sign on to the new network.

“Emergency workers currently use commercial wireless networks that can become clogged during emergencies. FirstNet will provide 20 MHz of national 700 MHz low-band telecommunications spectrum, and success-based payments of $6.5 billion over the next five years to support the buildout of the new network,” Bonner explained.

What It Brings

According to the agreement with FirstNet, AT&T is to spend $40 billion over the 25-year term of the agreement to build, operate and maintain this network, including upgrading it to 5G when 5G becomes available.

In addition, the network would integrate with AT&T’s own network assets, while the company would be able to use or resell unused time on the network.

“For AT&T, FirstNet provides opportunities for expanding its service network footprint into geographic areas with lower population density that may have been uneconomical on a commercial basis alone,” the analyst went on to say.

Also, Bonner believes the addition of 20MHz of adjacent 700 MHz spectrum to the 40MHz of currently unused spectrum held by AT&T would benefit network capacity, while placing the company in a robust strategic position as wireless data usage continues to grow.

In addition, although the Time Warner Inc TWX acquisition is still under regulatory review, management believes that the deal would be completed by the end of 2017.

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T-Mobile May Reflect M&A Upside, But Sustained Competition Merits A Deutsche Bank Downgrade ________ Image Credit: First Responder Network Authority's (FirstNet) Spectrum, By U.S. Government Accountability Office (https://www.flickr.com/photos/usgao/19029096806/) [Public domain], via Wikimedia Commons