AT&T Still Needs More Spectrum

NEW YORK ( TheStreet) - AT&T ( T) received approval to complete its purchase of $1.93 billion of spectrum from Qualcomm ( QCOM), but analysts said AT&T still needs to address its spectrum issues.

The Federal Communication Commission approved the 700 MHz spectrum sale, but this only alleviates issues in the medium-term, wrote Piper Jaffray analyst Christopher Larsen in a research report. Larsen rates AT&T overweight with a $34 price target.

Michael Hodel of Morningstar said the deal still leaves AT&T behind Verizon Wireless ( VZ) in the 700 MHz band in most markets.

Stifel Nicolaus analyst Christopher King said AT&T may look at acquiring Dish Network ( DISH) to help it beef up its spectrum.

"Dish has expressed interest in combining with T-Mobile, and AT&T could look at acquiring Dish, with spectrum a key consideration," King wrote in his research note. He rates shares of AT&T buy with a $32.50 price target.

"White space radio" may be a solution for the spectrum problems. Once used for analog TV, the spectrum could be used to clear up congestion issues. Independent local TV stations in large urban areas such as New York may benefit if they are given the opportunity to sell their airwaves as part of the auction. Wireless companies such as AT&T could pay handsomely for the rights.

Ben Abramovitz of Kaufman Bros. said it's too early to tell whether the FCC would auction the white services in 2012, although it has been talked about.

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