T-Mobile has clearly been making AT&T nervous — witness the stunning preemptive strike that AT&T made late last week when it said that it would give up to $450 to T-Mobile subscribers who switched to its service. Now T-Mobile has started taking some aggressive steps to address the biggest weakness in its war against AT&T, Verizon and Sprint: Its wireless network quality.
T-Mobile on Monday said that it is paying Verizon roughly $2.37 billion in exchange for spectrum on the coveted 700MHz band that it will use to boost its LTE coverage. T-Mobile says that the spectrum covers more than 150 million people in the United States and will give a particular boost to in-building coverage. The one issue for T-Mobile, however, is that the spectrum mostly covers major metro areas and does little to address T-Mobile’s coverage problems in more rural areas. The company’s full press release follows below.
T-Mobile to Acquire 700 MHz A-Block Spectrum from Verizon Wireless, Significant Step in Rapidly Advancing Un-carrier Network Experience
Low-band spectrum covering approximately 150 million people will further improve customer experience in major metro areas, boosting in-building and breadth of network coverage
BELLEVUE, Wash., Jan 06, 2014 (BUSINESS WIRE) –T-Mobile US, Inc. (NYSE: TMUS) today announced that its wholly-owned subsidiaries T-Mobile USA, Inc. and T-Mobile License, LLC have signed agreements to purchase certain 700 MHz A-Block spectrum licenses from Verizon Wireless for $2.365 billion in cash and the transfer of certain AWS and PCS spectrum licenses, which have an aggregate estimated value of approximately $950 million. The transactions, combined with T-Mobile’s existing A-Block holdings in Boston, will result in T-Mobile having important low-band spectrum in 9 of the top 10 and 21 of the top 30 markets across the United States.
“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.”
These are significant transactions that will further enhance a rapidly improving network experience that T-Mobile expects will create shareholder value. 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 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 early as the fourth quarter of 2014.
In 2013, T-Mobile continued its rapid 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.
Also, as part of the transaction, the two companies will realign spectrum blocks in certain markets, primarily in northern California and the Atlanta area.
The agreements are subject to approval by the Federal Communications Commission and the Department of Justice, and other customary closing conditions. Following regulatory approval, these transactions are expected to close in mid-2014.
TAP Advisors worked as financial advisors for T-Mobile on this transaction.