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A join T-Mobile and Verizon announcement this morning is surprising more than a few of us, as the two companies had previously been at odds, often publicly over the terms of Verizon’s proposed SpectrumCo purchase. Today, T-Mobile is “submitting applications to the FCC for the purchase and exchange of AWS spectrum licenses in 218 markets.” A deal for SpectrumCo AWS spectrum, a joint venture of various cable companies across the US was announced by Verizon last year in a $3.6 billion dollar deal. Now, both T-Mobile and Verizon announce this new agreement for a move that T-Mobile says will “improve” its position in 15 of the top 25 markets in the US. When the dust settles, the spectrum in question covers around 60 million people.
T-Mobile will gain spectrum in markets such as Philadelphia, Washington D.C., Detroit, Minneapolis, Seattle, Cleveland, Columbus, Milwaukee, Charlotte, Raleigh-Durham, Greensboro, Memphis, and Rochester. The deal will require regulatory approval however, T-Mobile emphasis it can deploy this spectrum to enhance T-Mobile’s 4G services, including for use with the “company’s network modernization and rollout of LTE services next year.”
This deal is a reversal for T-Mobile, as it has been fiercely opposed to Verizon’s pending spectrum deals with SpectrumCo and Leap, almost leading the charge to block these deals before the FCC. Now, T-Mobile appears to show some confidence in these deals going through by dropping their opposition and walking away from the regulatory battle with something to show. Both sides will change spectrum and the amount of cash T-Mobile will give to Verizon for the spectrum is so far, undisclosed.
“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 Philipp Humm said in a statement. “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.”
Full Press Release:
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 Hummsaid. “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.