First came the news about Ebay selling Skype after losing a little bit more than 1 billion dollars over the value of the initial acquisition. Google is of course named among the potential bidders.
Now we hear that Google is getting ready to bid for some of the coveted 700-megahertz spectrum in the auction due to begin on Jan 24th.
“From the company’s perspective, the overriding factor is how to foster more openness in networks. That is certainly the driving factor in our thinking about bidding on the spectrum.”
The 700-MHz band airwaves, which are being returned by broadcasters as they move from analog to digital signals early in 2009, can go long distances and penetrate thick walls. The auction is seen as a last chance for a new wireless player.
Google is considering funding a bid not only from its growing cash pile but by working with Wall Street. Outside financing would reduce its need for partners, one source said.
Google has said it would be prepared to bid at least $4.6 billion for the biggest chunk of spectrum if regulators agreed to policies to promote open use of such networks.
Now I don’t know about you but I definitely think that this is a BIG deal. Google seems to be gearing up to do something more than just release an open-source OS for mobile phones.
The internet giant could, with these 3 items in its shopping cart, seriously corner the mobile internet market.
Another thing comes to mind. By integrating Skype on all its android-powered mobiles and providing said mobiles with free/cheap wireless connectivity Google could easily score a checkmate against the major carriers.
It’s all good and well but such a move certainly isn’t cheap. Google would have to bring in some partners to finance the entire operation. If instead of picking a partner it will “work” with Wall-Street as the article quoted above suggests it will still have to give away some of the control they might have by being the only player.
If we do some math we have something between 1.2 and 1.5 billion $ to buy Skype off Ebay (just a guess off the top of my head). Anything between 4.5 and 5 billion $ for the band airwaves. To these costs we have to add another hefty sum which Google will have to cough up to maintain Android free whilst building and evolving it.
I think we are looking at a total of around 7 to 8 billion. Let me say it again, this is a BIIIIG deal, Google is betting big here and if something goes wrong – which is very likely as I don’t think giants like AT&T or Verizon will concede without a fight – They’ll be in big trouble. Google’s market cap at the moment is of 195.79 billion $, however with the current volatility of the markets I wouldn’t put too much trust in that number – The statistic we have to keep in mind is that according to its sec filings Google has something around 13 billion $ in cash available, a big sum, but looking at the figures I mentioned above the sum looks a bit stretched.