T-Mobile Pays Verizon Nearly $2.4 Billion USD for A-Block Spectrum
January 6, 2014 11:11 AM
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Verizon is receiving certain AWS and PCS spectrum licenses in exchange for the A-Block spectrum
T-Mobile and Verizon have swapped airwaves in an effort to gain spectrum where the two U.S. carriers need it most. T-Mobile paid Verizon $2.365 billion USD in cash for certain 700 MHz A-Block spectrum licenses. In exchange, Verizon is receiving certain AWS and PCS spectrum licenses from T-Mobile worth approximately $950 million USD.
On T-Mobile's end, the new licenses will fill in the gaps in its network coverage. More specifically, it will provide T-Mobile with low-band spectrum in nine of the top 10 markets across the U.S.
“This is a great opportunity to secure low-band spectrum in many of the top markets in America,” said John Legere, President and CEO of T-Mobile. “These transactions represent our biggest move yet in a series of initiatives that are rapidly expanding our already lightning fast network and improving its performance across the country. We will continue to find ways to advance our customers’ network experience just as our bold Un-carrier moves have shaken up the wireless industry to benefit consumers.”
This could make T-Mobile look even more appealing in a
. Just last month, it was reported that SoftBank Corp. -- which already acquired U.S. carrier Sprint last summer for $21.6 billion USD -- is in talks with banks like Credit Suisse Group AG, Mizuho Bank Ltd, Goldman Sachs Group Inc and Deutsche Bank AG in an effort to acquire a majority stake in T-Mobile. The deal has been valued at around $20 billion.
Some reports say T-Mobile could continue filling in its coverage gaps by looking to other owners of A-block spectrum, such as U.S. Cellular Corp. But nothing has been confirmed in that area yet.
T-Mobile raised approximately $4 billion USD last year in an effort to buy new spectrum licenses and expand its network.
As for Verizon, its new AWS and PCS spectrum licenses from T-Mobile will help relieve wireless network congestion in cities with heavy traffic (which affects performance). These key cities are Los Angeles, San Francisco, Dallas, Detroit and Atlanta.
The deal is expected to close by mid-2014.
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1/6/2014 3:14:39 PM
This is great news for T-Mobile, but why would Verizon ever give up any 700MHz spectrum at all? That stuff is the most valuable spectrum available for mobile use. Up here in Canada, we're getting ready for our 700MHz auction, and all the companies are fighting tooth and nail to get as much of it as they can for themselves. The incumbents even sued the government to make the auction rules more favourable to them so that they could get a bigger chunk.
1/6/2014 7:51:54 PM
They agreed to sell their A block spectrum in order to get approval for the acquisition of AWS spectrum from cable companies needed to give them national AWS coverage. Previously they only had significant amounts of AWS spectrum on one side of the country; and adding a band that only worked on one side of the Mississippi valley (roughly speaking) would be problematic at best; meanwhile build out deadlines meant they needed to start doing something with what they had fairly soon or be forced to hand it back to the govt. As a side note, the initial AWS auction resulted in really messy ownership: Only tmobile had coverage nationwide; which was why only they and a few smaller carriers built anything out on it at the time.
The reason they were willing to sell ATT their 700mhz B block spectrum and to TMobile 700 mhz A spectrum instead of giving up AWS to get more 700 mhz or PCS (aside from convincing someone to sell it to them anyway) was that because getting radios to place nicely with both its nationwide C block and the regional A/B blocks simultaneously was proving more difficult than expected because the C tx and A/B rx frequencies were too close together. (A cynic might wonder if they had a better idea of the technical risks involved than they stated publicly; but felt that playing keep away to prevent ATT from having nationwide coverage initially was worth it even if they knew they'd probably have to sell the A/B blocks eventually.)
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