Spectrum in the wireless industry is a precious commodity, so it's always a big deal when some of it changes hands. It's an even bigger deal when it involves one of the big boys and yesterday's announcement involved the two biggest carriers in the country, Verizon and AT&T.
AT&T Inc. has just agreed to purchase U.S. spectrum licences which will cover 42 million more people in 18 states from Verizon Wireless for $1.9 billion dollars and some of it's own spectrum. This deal will allow AT&T to expand their 4G LTE coverage on the 700MHz band. For a bit of history this band was originally used for analog TV channels and became available in 2008 when the transition to digital TV was made. The spectrum was split up into blocks where Block A was gobbled up by Verizon and US Cellular while the majority of Block B went to AT&T. Also as part of the swap Verizon will receive spectrum on the AWS (Advanced Wireless Services) band from AT&T which will allow for their own expansion into markets including Los Angeles, Fresno, and Portland.
This is just one piece of the confusing spectrum puzzle that involves enough companies and bands to make your head spin. Initially back in 2011 AT&T had a deal in place to acquire Deutsche Telekom AG's T-Mobile for $39 billion, however that deal fell through under regulatory pressure. Then back in April of 2012 Verizon decided to divest itself from their unused 700MHz licenses because they are in the process of their own acquisition of 1700MHz / 2100MHz spectrum from Comcast, Time Warner Cable, Bright House Networks and Cox Communications for $3.9 billion. This all allowed for the current deal to take place.
There is a possibility that this deal was hastened by the ongoing battle over the purchase of spectrum owned by Clearwire Corporation. In that case it's a battle between Sprint who has an offer of around 2.2 billion on the table and Dish Network, who are also looking to build out their wireless portfolio and has made roughly the same offer.
Here is the AT&T press release:
AT&T Agrees to Acquire 700 MHz Spectrum from Verizon Wireless
Dallas, Texas, January 25, 2013
AT&T* announced in an 8-K filing today that it has agreed to acquire spectrum in the 700 MHz B band from Verizon Wireless for $1.9 billion in cash and Advanced Wireless Services (AWS) spectrum licenses in several markets, including Phoenix, Ariz., Los Angeles and Fresno, Calif. and Portland, Ore.
The 700 MHz licenses to be acquired by AT&T cover 42 million people in 18 states â€” California, Colorado, Florida, Idaho, Illinois, Louisiana, Montana, New Mexico, New York, Ohio, Oklahoma, South Dakota, Tennessee, Texas, Utah, Virginia, Washington and Wyoming.
This acquisition complements AT&T's existing holdings in the 700 MHz B band and will allow AT&T to continue to quickly deploy 4G LTE services to meet demand for mobile Internet services on a wide array of smartphones, tablets and other devices. The company announced in November 2012 that it plans to reach 300 million people in the U.S. with its 4G LTE network by the end of 2014.
In conjunction with this transaction, AT&T will sell to Grain Management a single AWS license and will lease 700 MHz spectrum from Grain Management in three markets.
The transaction is subject to regulatory approval. AT&T anticipates closing the transaction in the second half of 2013.
*AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc.
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