T-Mobile has determined 3.45GHz spectrum is not suitable for its 5G network. But AT&T continues to use C-band and 3.45GHz spectrum for its 5G midband network buildout.
AT&T is taking its cut from the breakup of UScellular. The company on Thursday inked a deal to buy lowband 700MHz and midband 3.45GHz spectrum from UScellular in a deal worth $1.01 billion.
That transaction follows Verizon's announcement last month that it would buy $1 billion worth of UScellular's spectrum in the 850MHz and AWS spectrum bands. And that deal stems from T-Mobile's announcement in May to purchase around 30% of UScellular spectrum holdings in bands ranging from 600MHz to 700MHz, AWS, 2.5GHz and 24GHz. T-Mobile is also buying all of UScellular's customers and its retail stores in a deal worth $4.4 billion.
All three deals still require regulatory approvals.
"As with the other mobile network operators, we are confident that AT&T can put it [the spectrum] to productive use in communities throughout the US," UScellular CEO Laurent Therivel said in a release.
UScellular has so far sold off roughly 70% of its spectrum holdings, apart of its millimeter wave (mmWave) spectrum holdings. It's not clear whether any other buyers might emerge for those remaining spectrum licenses.
The midband equation
AT&T is the only big 5G network operator to put midband 3.45GHz spectrum into its network. T-Mobile announced last month that 3.45GHz spectrum does not fit into its 5G plan. As a result, the company recently agreed to sell all of its 3.45GHz holdings, mostly to Columbia Capital.
Instead, T-Mobile is using 2.5GHz and C-band spectrum for the midband layer of its 5G network. Midband spectrum is viewed as critical to 5G connections due to the spectrum's ability to cover large geographic areas and carry large amounts of data quickly.
AT&T is splitting its midband 5G network buildout between its C-band and its 3.45GHz spectrum holdings. AT&T was the biggest bidder in the FCC's 3.45GHz spectrum auction. (Verizon was the big winner in the FCC's C-band auction before that, and is building its midband 5G network exclusively around those C-band holdings).
The financial analysts at New Street Research warned that AT&T is now moving near the FCC's 40MHz spectrum aggregation ownership limit the agency set for its 3.45GHz spectrum auction.
"The aggregation limit doesn't expire until January 2026," the analysts wrote in a note to investors Thursday following the announcement of AT&T's new spectrum deal with UScellular. "Either AT&T is hoping to secure a waiver from the FCC to close the transaction before then, or they will only close the transaction after January 2026."
New Street estimate that UScellular's remaining spectrum holdings is worth about $1.8 billion. The company is also still working to sell its cell tower business.
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