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T-Mobile Buys Verizon Spectrum in $3.3B Deal
T-Mobile Buys Verizon Spectrum in $3.3B Deal

By Jennifer LeClaire
January 6, 2014 10:13AM

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Trading and buying spectrum is a regular occurrence in the wireless industry. So buying spectrum from Verizon isn't unusual. This will help T-Mobile provide better service to its customers in certain markets. Buying Verizon spectrum is one step in a long journey toward recovery for T-Mobile, and it's a step in the right direction, said analyst Jeff Kagan.
 

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Even while rumors spin about Sprint snapping up T-Mobile, the nation’s fourth-largest wireless carrier continues to push toward its goals.

The company just announced it has inked deals to acquire certain 700 MHz A-Block spectrum licenses from Verizon Wireless for $2.365 billion in cash, as well as the transfer of certain AWS and PCS spectrum licenses, which have an aggregate estimated value of approximately $950 million.

The end result: combined with T-Mobile’s existing A-Block holdings in Boston, the transactions mean the company now has what it calls “important” low-band spectrum in nine of the top 10 and 21 of the top 30 markets across the United States.

The Value of Low-Band Spectrum

“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.”

T-Mobile is pushing that message hard, calling the deals “significant transactions” that will further enhance the network experience that T-Mobile expects will create shareholder value. Here’s why: Low-band spectrum substantially improves in-building coverage as well as coverage in rural areas. It also travels greater distances than high-band spectrum and therefore is a more efficient way to provide coverage at the edge of cities and in less densely populated areas.

Combined with its existing Boston A-Block holdings, T-Mobile said it will have low-band spectrum covering approximately 158 million people -- including New York, Los Angeles, Dallas, Houston, Philadelphia, Atlanta, Washington D.C., and Detroit. T-Mobile anticipates rolling out service and compatible handsets on this A-Block spectrum as soon as the fourth quarter of 2014.

A Long Way to Go

We asked Jeff Kagan, an independent technology analyst, for his thoughts on the buy. He told us this is indeed good news for T-Mobile.

“T-Mobile has worked hard during the last year to improve their image, and while their actual performance is also better it still has a long way to go to catch up to Verizon, AT&T and Sprint,” Kagan said.

“Trading and buying spectrum is a regular occurrence in the wireless industry. So this is not unusual. This will help T-Mobile provide better service to their customers in certain markets. This one step in a long journey toward recovery for T-Mobile, and it's a step in the right direction.”

In 2013, T-Mobile continued its LTE rollout, deploying 10+10 MHz 4G LTE in 43 of the top 50 metro areas and it is commencing substantive deployments of 20+20 MHz 4G LTE in 2014. The company launched its nationwide 4G LTE network in 2013, which currently covers approximately 209 million people in 273 metro areas.
 

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