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T-Mobile Spends $2.4B on Verizon Spectrum

Sarah Thomas
1/6/2014
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T-Mobile has agreed to purchase 15 lower 700MHz A Block licenses from Verizon Wireless for $2.365 billion in cash, and plans to use the spectrum to improve its coverage and better compete with its larger rivals. (See Report: T-Mobile Nears Verizon Spectrum Deal.)

The deal, announced Monday morning, will also see Verizon Wireless transfer eight additional lower 700MHz A Block licenses worth $950 million to T-Mobile US Inc. in exchange for its various AWS and PCS licenses in Los Angeles, San Francisco, Dallas, Atlanta, Detroit, and other major US markets.

Verizon will gain AWS spectrum in 19 markets covering 34 million PoPs and PCS spectrum in eight markets reaching 21 million PoPs, while T-Mobile gets low-band spectrum in 21 of the top 30 markets across the US. The "uncarrier" says it now reaches 158 million people with low-band spectrum across the US.

The spectrum deal is subject to Federal Communications Commission (FCC) review, but the companies expect it to close in the first half of the year. T-Mobile says it will roll out service and compatible handsets as soon as the fourth quarter.

Why this matters
This move marks the completion of Verizon's spectrum license sale, which it began in May 2012. T-Mobile, along with AT&T Inc. (NYSE: T), is one of nine carriers that have purchased spectrum from Big Red through this process. AT&T committed to supporting band 12 in the lower 700MHz in September when the wireless operator agreed to support it in its devices and work through any interference issues that may arise between bands 17 and 12. (See AT&T Closes $1.9B Verizon Spectrum Buy and AT&T Strikes $1.9B Spectrum Deal With Verizon.)

The purchase is significant for T-Mobile as it looks to catch up with AT&T and Verizon's low-band spectrum holdings, which are important for in-building coverage and extending coverage to rural areas. According to T-Mobile COO Jim Alling's recent comments, this deal could just be the first of many for the carrier.

Related posts:

— Sarah Reedy, Senior Editor, Light Reading

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Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
1/7/2014 | 9:30:04 AM
Re: More to come
Right, but as Mordy pointed out, with deals like this, there are increasingly fewer reasons to not switch to T-Mobile.

Btw, were you there last night to witness Legere getting kicked out of AT&T's party at CES? Sounded pretty amazing.
DanJones
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DanJones,
User Rank: Blogger
1/6/2014 | 7:13:54 PM
Re: More to come
I think Verizon is pretty happy with its spectrum position now though.
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
1/6/2014 | 7:10:46 PM
Re: More to come
Yeah, definitely helps their cause with Sprint. They're becoming a formidable potential competitor to AT&T and Verizon.
DanJones
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DanJones,
User Rank: Blogger
1/6/2014 | 6:56:13 PM
Re: More to come
Yeah, they are hungry for low-band now. Maybe to try and give a competitive edge/lever with Sprint?
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
1/6/2014 | 12:22:44 PM
Re: conference call NOW
Hmm I'm not sure. I was surprised he said there are devices out already, but he didn't specify if they are handsets.
MordyK
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MordyK,
User Rank: Light Sabre
1/6/2014 | 11:52:17 AM
Re: conference call NOW
Curious if AT&T's HTC one is one of them.
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
1/6/2014 | 11:30:57 AM
Re: More to come
Carter says, "We are extremely interested in a nationwide footprint in the low band to support future growth in our company. #1, we'll be extremely disciplined in how we approach completing that nationwide footprint, and #2, there are multiple paths to complete that footprint."
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
1/6/2014 | 11:25:45 AM
More to come
This is definitely just one of many spectrum acquisitions T-Mobile has planned. Ray said the carrier is still very focused on future auctions, and "it's still a priority to get new low-band spectrum."
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
1/6/2014 | 11:25:01 AM
Re: conference call NOW
Ray says: 

First devices compatible with A-block already exist... Keen to partner with AT&T and others to grow the handset ecosystem... Initial devices supporting A-Block and T-Mobile at the end of the year... AT&T is working on adding compatible devices to its portfolio to extend the ecosystem... T-Mobile has a history of deploying new bands and techs quickly. 
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
1/6/2014 | 11:20:58 AM
Re: conference call NOW
They say new compatible devices coming in Q4.

CTO Neville Ray now saying the low-band spectrum gives it four-times better coverage in rural areas, and the indoor signal is 2x better than mid-band and even greater than high-band.
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