Verizon to sell $2.4 billion spectrum package to T-Mobile
In a $3.3 billion deal, Verizon has agreed to sell a 700 MHz A Block spectrum to rival T-Mobile. As part of the exchange, Verizon will get AWS and PCS spectrum worth about $950 million from T-Mobile. The deal still needs to be approved by both the Federal Communications Commission and the U.S. Department of Justice.
According to FierceWireless.com, T-Mobile CEO John Legere told a conference of investors that “T-Mobile’s acquisition of Verizon’s A Block licenses give the carrier the ability to more effectively compete against AT&T and Verizon in a wider range of markets than it previously could.”
The deal will give T-Mobile added strength in low-frequency spectrum (below 1 GHz ) where Verizon and AT&T dominate. If this deal goes through, T-Mobile will have “low-band spectrum in nine of the top 10 and 21 of the top 30 markets across the United States.” All told, T-Mobile will “...have low-band spectrum covering approximately 158 million POPs, including Atlanta, Dallas, Detroit, Houston, Los Angeles, New York City, Philadelphia and Washington, D.C.”
T-Mobile had raised nearly $4 billion by selling debt and stock last November, and can close the deal as soon as it receives federal approval.
With this acquisition, T-Mobile’s argument that it needs special rules in the upcoming spectrum auction become even shakier. After all, if T-Mobile can spend billions to buy low-frequency spectrum, it doesn’t need preferential rules at auction.
And, as MGA stock analyst Jeff Silva notes, this transaction makes it even more likely that the DOJ will hold the line on its four-carrier national market position, reducing the likelihood of a T-Mobile/Sprint transaction in the near-term.
T-Mobile buys Verizon's 700 MHz A Block spectrum for $2.4B (FierceWireless, Jan. 6, 2014)
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