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.
- AT&T Lures T-Mobile Subs With $450 Promise
- T-Mobile Quietly Kicks Off Double-Wide 4G
- US Spectrum Outlook: Smooth Not Crunchy?
- Verizon Fears 4G Spectrum Shortfall
— Sarah Reedy, Senior Editor, Light Reading