T-Mobile US Inc (NYSE:TMUS), the fourth-largest wireless carrier in the United States, entered an agreement to purchase 700 Mhz A-Block spectrum licenses from Verizon Wireless to accelerate the expansion of its network in major cities across the country,
Under the agreement, T-Mobile US Inc (NYSE:TMUS) will pay Verizon Wireless $2.365 billion in cash and the transfer of certain AWS and PCS spectrum licenses valued at approximately $950 million. Verizon Wireless previously acquired the spectrum for approximately $2.4 billion.
According to T-Mobile US Inc (NYSE:TMUS), the acquisition of the new spectrum in addition to its existing A-Block spectrum in Boston allows the company to have significant low-band spectrum in major markets in the United States covering 158 million people.
Great opportunity for T-Mobile
John Legere, president and CEO of T-Mobile US Inc (NYSE:TMUS) said, “This is a great opportunity to secure low-band spectrum in many of the top markets in America. 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.”
In November, T-Mobile US Inc (NYSE:TMUS) raised approximately $4 billion from offering equities and debt to fund its plan to acquire additional spectrum. At that time, the company said it was in discussion with a private entity regarding the spectrum acquisition.
According to the fourth largest wireless carrier, the transaction would further enhance the network experience of its customers, and it also expects to create value for shareholders. T-Mobile US Inc (NYSE:TMUS) explained that the low-band spectrum would substantially improve its in-building coverage as well as in the rural areas. The company expects to roll out its newly acquired A-Block spectrum in the fourth quarter of 2014.
The transaction is subject to the approval of the Department of Justice (DOJ) and the Federal Communications Commission (FCC) and other customary closing conditions. The companies expect to complete the deal in the middle of this year.
Legere calls AT&T desperate
Technology observers believe that the transaction would help T-Mobile US Inc (NYSE:TMUS) regained its subscriber losses, and to add new customers . The company implemented different strategies to encourage new customers to shift to its network by offering cheaper unlimited data plans, which negatively affected its rivals, particularly AT&T Inc. (NYSE:T).
Last week, AT&T Inc. (NYSE:T) offered as much as $450 in credit to T-Mobile customers who switch their service to its network. In response, Legere called AT&T’s strategy a “desperate move.”
He said, “This is a desperate move by AT&T Inc. (NYSE:T) on the heels of what must have been a terrible Q4 and holiday for them. I’m flattered that we have made them so uncomfortable! We used AT&T’s cash to build a far superior network and added Un-carrier moves to take tons of their customers – and now they want to bribe them back! Consumers won’t be fooled…nothing has changed; customers will still feel the same old pain that AT&T is famous for.”