Verizon and T-Mobile may not regularly make headlines together, but this morning the two companies have announced that they've struck a deal to swap spectrum (and some money) to bolster both companies' LTE networks. Yes, including the one T-Mobile has yet to build. While specifics haven't been disclosed, it sounds like T-Mobile will be the big winner here, walking away with a net gain in spectrum holdings—something the company desperately needs—while paying an undisclosed amount of money to Verizon for the trouble.
The deal isn't solid yet, though. Some of the spectrum that Verizon is offering to T-Mobile technically belongs to SpectrumCo, Cox, and Leap at the moment. Verizon is in the process of purchasing spectrum from these companies and this new deal with T-Mobile depends on Verizon acquiring those holdings. The FCC and the DOJ could still block Verizon's acquisitions of those licenses, though Verizon may be selling off some of the spectrum in an attempt to persuade the feds to give it the green light.
From Verizon's press release:
“The agreement with T-Mobile is further evidence of the importance of a secondary spectrum market to give companies the flexibility to exchange or acquire spectrum to meet customers’ growing demands for wireless data services,” said Dan Mead, president and CEO of Verizon Wireless.
"See? We're playing nice! Let us keep trading spectrum." Meanwhile, T-Mobile is taking the opportunity to talk up its 4G plans. Touting its net spectrum gain, the company says this new agreement will allow it to trade its old spectrum covering 22 million people for new spectrum covering 60 million people. T-Mobile says this is in addition to its $4bn "network evolution plan" that the company is already pursuing, subsidized by the failed AT&T acquisition.
All in all, it seems like T-Mobile is finally getting dealt some decent cards. Meanwhile, Verizon gets to improve its own already substantial LTE network while brushing off regulatory scrutiny, and everybody wins. Right?
T-Mobile Signs Spectrum Agreement With Verizon Wireless
T-Mobile to Improve Portfolio of Nationwide Broadband Spectrum
Following Regulatory Approval
Net Gain of Spectrum Will Assist Rollout of LTE in 2013
Bellevue, Wash. — June 25, 2012 — Today, T-Mobile USA, Inc. announced an agreement with Verizon Wireless for the purchase and exchange of certain Advanced Wireless Services (AWS) spectrum licenses in 218 markets across the U.S. The transaction will improve T-Mobile’s spectrum position in 15 of the top 25 markets in the U.S. by providing an opportunity for T-Mobile both to acquire additional AWS spectrum and to realign its existing spectrum holdings. Following regulatory approval, this spectrum can be promptly deployed to enhance the company’s 4G mobile broadband service, including the rollout of LTE service next year.Some of the spectrum T-Mobile is acquiring in this transaction include licenses that Verizon is purchasing from SpectrumCo, Cox and Leap, and the agreement is contingent on the closing of those transactions and is subject to regulatory approval by the Federal Communications Commission (FCC) and the Department of Justice.
“This agreement will provide T-Mobile with critical AWS spectrum, enhancing both network capacity and performance and allowing us to meet the growing consumer demand for 4G mobile broadband,” T-Mobile CEO and President Philipp Humm said. “This is good for T-Mobile and good for consumers because it will enable T-Mobile to compete even more vigorously with other wireless carriers. We anticipate FCC approval later this summer, in time for us to incorporate this new spectrum into our network modernization and the rollout of LTE services next year.”
T-Mobile will gain spectrum covering 60 million people — notably in Philadelphia; Washington, D.C.; Detroit; Minneapolis; Seattle; Cleveland; Columbus, Ohio; Milwaukee; Charlotte, N.C.; Raleigh-Durham, N.C.; Greensboro, N.C.; Memphis, Tenn.; and Rochester, N.Y. — in exchange for spectrum covering 22 million people and certain cash consideration. The agreement also includes exchanges in a number of markets in which the companies will swap licenses to create more contiguous blocks of spectrum and re-align spectrum in adjacent markets. These intra-market swaps will enhance T‑Mobile’s network performance and data throughput in key locations. This agreement is in addition to T-Mobile’s previously announced $4 billion 4G network evolution plan, which includes modernization of 37,000 cell sites, launching 4G HSPA+ services in the 1900 MHz band and deployment of LTE in 2013.
About T-Mobile USA:
Based in Bellevue, Wash., T-Mobile USA, Inc. is the U.S. wireless operation of Deutsche Telekom AG (OTCQX: DTEGY). By the end of the first quarter of 2012, approximately 129 million mobile customers were served by the mobile communication segments of the Deutsche Telekom group — 33.4 million by T-Mobile USA — all via a common technology platform based on GSM and UMTS and additionally HSPA+ 21/HSPA+ 42. T-Mobile USA’s innovative wireless products and services help empower people to connect to those who matter most. Multiple independent research studies continue to rank T-Mobile USA among the highest in numerous regions throughout the U.S. in wireless customer care and call quality. For more information, please visit http://www.T-Mobile.com. T-Mobile is a federally registered trademark of Deutsche Telekom AG. For further information on Deutsche Telekom, please visit www.telekom.de/investor-relations.