T-Mobile US Inc (NYSE:TMUS), the fourth largest wireless carrier in the country, aims to purchase spectrum from its smaller competitors as a contingency plan in case the takeover proposal by Sprint Corporation (NYSE:S) falls through, according to the New York Post, citing information from people with knowledge about the situation.
One of the sources said, “Buying spectrum would add to the potential divestitures resulting from the combination.”
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T-Mobile offers to buy low-band spectrum
According to the report, T-Mobile US Inc (NYSE:TMUS) sent proposals to a number of small carriers to buy their low-band spectrum because it is the key to urban markets such as New York City and San Francisco as it has the ability to penetrate buildings better thus covering more territories compared with the high-band spectrum. It also provides the same exact amount of bandwidth offered by its high-band counterpart.
T-Mobile US Inc (NYSE:TMUS) was previously in a disadvantaged position because it was only major wireless carrier in the country without a low-frequency spectrum. In April, however, the firm completed the acquisition of such spectrum for $3.3 billion from Verizon Communications Inc (NYSE:VZ).
Sources said T-Mobile will be able to use the 700 megahertz A-band spectrum it acquired to cover almost 50% of the country, and it could start filling in the rest of its footprint. The rest of the 700 MHz A-band spectrum licenses are held by approximately 30 smaller carriers including US Cellular and Vulcan Wireless, which is owned by Paul Allen, the co-founder of Microsoft Corporation (NASDAQ:MSFT).
One of the people familiar with T-Mobile’s plan suggested that the company might be “trying to push for this spectrum now before reaching the Sprint deal.”
Sprint – T-Mobile close to reaching a merger deal
SoftBank Corp (TYO:9984) (OTCMKTS:SFTBF), the parent company of Sprint Corporation (NYSE:S) headed by Japanese billionaire Masayoshi Son, has been very eager to takeover T-Mobile US Inc (NYSE:TMUS), claiming that the merger will strengthen competition against the dominant players, AT&T Inc (NYSE:T) and Verizon Communications Inc (NYSE:VZ).
“Us becoming a more credible competitor in scale is something good for American consumers and citizens,” said Mr. Son.
Earlier this month, it had been reported that Sprint Corporation (NYSE:S) is close to reaching an agreement to acquire T-Mobile US Inc (NYSE:TMUS) for $32 billion.
The regulators from the U.S. Department of Justice previously stated that the proposed merger will go through “intense scrutiny” and potentially face regulatory difficulties.