T-Mobile can get $2 billion from Deutsche Telekom for 600MHz spectrum auction

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The 600MHz spectrum auction is starting to get close, and T-Mobile just got a nice infusion of spending money.

An SEC filing has revealed that T-Mobile can sell $2 billion in senior notes to Deutsche Telekom. These notes can be issued until December 1, 2016, will mature on March 15, 2021, and have 5.3 percent coupon.

According to the SEC filing, the $2 billion that T-Mobile is intended to be used “for acquisitions of low-band spectrum,” like the 600MHz airwaves that’ll soon be put up for auction. If the money isn’t needed for low-band spectrum, it must be used for refinancing debt. And if it’s not needed for low-band spectrum or refinancing debt, it must be used for “general corporate purposes.”

T-Mobile has said that it could spend up to $10 billion during the upcoming 600MHz auction, but that it doesn’t think it’ll need more than $1 billion of $1.5 billion. Magenta plans to target 600MHz spectrum in areas where it currently has no 700MHz coverage, as well as major metro areas that do have 700MHz but could use some support. This deal with parent company Deutsche Telekom gives T-Mobile more cash to play with in the upcoming auction to get the airwaves that it really wants.

Via: Reuters
Source: SEC

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  • Glen Baerett

    must be used for “general corporate purposes.”

    That sounds like code for marketing and also executive bonus checks. It certainly won’t cover the costs involved with everyone upgrading phones and devices to use 600MHz airwaves which have yet to be awarded…

    So if your a new T-Mobile customer, get ready for the salesperson or customer service to be trained to tell you that the problem is your phone– It’s “old” and “won’t work” and the only remedy offered by the company is a new 24 month equipment payment plan contract…

    • AS118

      You’re right, but to be fair, I wish they’d do that with people who need band 12 phones, but don’t have them right now. At least, to an extent.

      Right now, they seem to be more interested in selling all their phones (band 12 capable or not) and clear their inventory rather than educating their customers about whether their phone really supports “extended range lte” or not.

      • RLB63

        Not everyone needs band 12. Not even available in some big markets.

        • Will

          You are correct. The need for Band 12/17 is only due to not having towers spaced closer than they currently do. In some metro areas, towers may be located on buildings and very dense. So phones and devices will always default to the higher bands if they are available.

          T-Mobile was also smart in that they give out LTE network extenders that are open to anyone within range. So even if you don’t have a Band 12 capable phone, you may be within range and hop onto someone’s LTE network extender.

        • Jay Holm

          There is no such thing as “not needing” spectrum. That doesn’t make any sense at all. As much spectrum as possible is best in as mAnt markets as possible with carrier aggregation!!!!!

          Never limit technology!

  • Alex

    I think this is great news and it is going to really come in handy. T-Mobile is well on it’s way to knocking on the doors of AT&T but not Verizon. I for one am glad that I stuck with TMO as the consumer wins in this scenario. More coverage means better service and I am all for it. I just hope that T-Mobile is wise and doesn’t change who they are. If they continue to expand coverage, they can continue to revolutionize the industry by keeping prices competitive and lower while getting service akin to Verizon and AT&T, if not better.

    • kgraham182

      If they continuing expanding, they will have no choice but to continue raising price. A budget carrier cuts corners to allow for lower prices.

  • guest

    what date the the auction begin and end?

  • Bud

    they need it. 4 dropped calls today on queens blvd…smh

    • guest

      Do you have a phone with Carrier Aggregation or not?

      • Bud

        iphone 6s+

        • guest

          I’m not sure about your device but NY has CA, of course it depends on the other LTE band signal strength too,

        • Bud

          It’s really embarrassing when speaking to a customer and your call keeps dropping. This also happens on west side high way to me. Idk, I hope it gets better.

        • guest

          Some people say iPhones have poor reception, check your signal bars when you are having those problems, could be that too.

      • Jay Holm

        Uhh…is carrier aggregation even deployed?!?!? I live in Houston, I don’t believe it is.

        • guest

          In some places yes, but I don’t think in Houston. I don’t know why they are very quite about CA, maybe they don’t people learning about T-Mobile’s overall LTE issues.

  • Joe

    That is great news, I sure hope they can acquire as much spectrum as possible. My coverage has been spotty.

    Even with LTE data connection currently for me, the internet is slow or doesn’t work sometimes as assume I was on band 12 which is hogged by so many users in that band.

  • Will

    I do hope people realize that this frequency won’t be rolled out until 2018 or 2019 or even later and you won’t be using it on a phone until 2020 or later. In other words, we will in another election year before you will be able to use it on T-Mobile. This is a long term purchase. The carriers haven’t even rolled out the AWS-3 spectrum from the last auction.

    • kev2684

      with 3 major carriers in the auction I think they’ll start deploying ASAP maybe late 2017 or early 2018. By then all networks will be too congested for them not to expedite the process. AT&T is the only network who have AWS-3. With the power of 3 carriers I’m guessing an LTE band will be designated quicker.

      • Will

        Actually Verizon, T-Mobile, and Dish also won AWS-3 spectrum in the last auction. The AWS-3 auction was the highest grossing auction because carriers know that it is more valuable than the lower frequencies since it has higher capacity and speed. No carriers have deployed it yet as the standard LTE Band 66 was just recently finalized and no phone even uses AWS-3 LTE band 66 yet. The problem with the 600 band is that (1) there are tv channels using it and they will need to vacate and/or move to another band, and (2) there is not a LTE band already for this frequency. It takes years to create new LTE band standards and hardware both on the phone and the network to use the new frequencies.

        The 600 band will not solve the network congestion issues. That is what the AWS-3 LTE band is for as it inherently has more capacity. Plus there are interference issues with the 700 frequency that must be addressed before it can be used. That means it will be a last resort band (nothing else penetrates or reaches) and not a capacity band.

        So no, your phone will not be using it anytime soon. And you absolutely will need to buy a new phone to use it.

        • Randy’s Buddy

          Great comment. I wish I would have read yours before writing my own.

          Another thing; is that not every tower has Fiber going to it. So in many areas, DSL (copper lines) may have to be used or upgraded.

          Some sites may connect via microwave, but then the tower owners need to sign-off on tower modifications. Microwave radomes can be very heavy; and the sites still have to survive hurricane-force winds with T-Mobile’s new equipment installed. In many cases, T-Mobile is one of 3 or 4 companies on the structure.

        • guest

          In your opinion, is having LTE (for data) in the 700mhz a bad idea?

        • Will

          No it’s actually a good idea for VoLTE phone calls. In the future, all calls will be IP data calls similar to how long distance calls are all IP calls right now. It is more efficient and for some may be the only way they can make a call. The problem is that VoLTE calls will be prioritized over other data (as it should be). So as more VoLTE calls are made, less bandwidth will be available for other data.

          The lower bands (600, 700, 800, 850) were used for LTE because of distance and penetration. But as soon as possible the phone or device will always be shuffled over to a higher band (AWS 1/3, PCS, or WCS) because those bands simply have higher capacity.

        • guest

          In my experience I don’t see the shuffling from lower band B12 to a higher band taking place. B12 in my area has around 4 signal bars and around 2 bars for the 2 higher bands, I was comparing the signals with one phone with B12 and one without it, the phone without B12 has higher data speeds.

          I think because lower band B12 has more reach and therefore stronger signal in most places it has the preference most of the time. And that’s why I think it’s the problem. The only solution I see is Carrier Aggregation in all places and all devices.

        • Will

          But if you have the same amount of coverage for Band 12 and Band 4, the preference is going to be for Band 4, leaving Band 12 free for those areas of coverage that need it.

        • guest

          That makes sense, but they should deploy more B2 and B4 to match B12 signal strength.

        • Will

          In theory they would always place all of the bands that they have a license to use in that area. But that would be very expensive and the towers would need to be very close together for Band 2/4/66. So that will only be done in major metro areas where capacity is important. In many areas, only Band 12 is being deployed as T-Mobile can place the towers farther apart. I am sure that T-Mobile has a team that decides the cost/benefit of installing new towers. For some areas, they may decide that only Band 12 is needed and in other areas, only Band 2/4 is needed.

        • guest

          I understand the cost/benefit thing. My thing is that LTE service is very slow in more and more places, and I’m not alone, I see many talking about it on reddit.

          My non-B12 phone has faster speeds than my B12 phone, and I don’t know how they’ll make it better; actually I think it’s gonna get worse with all the new adding customers and unlimited promotions.

          I use data for internet browsing and maps not for streaming entertainment, so I don’t think I’m asking a lot.

          Thanks for your replies.

        • 9to5Slavery

          And if it isn’t as great, why not carrier aggregate it to make it great??? They have a lot of towers already!

        • Will

          CA will of course be used. But you can’t forget about physics. 600Mhz (and really all lower frequencies such as 700Mhz, 800Mhz, and 850Mhz) travel far and penetrate better indoors and underground. In many cases, the 600 band will be the only band your phone or device can pick up since the towers will be optimized for the higher (and more capacity carrying) bands. So there may not be any other bands to aggregate.

          It will also be used to build out rural areas where even the 700 band (LTE band 12/17) would not reach. The hope is that there should be no area in the continental U.S. without some (although slow) coverage.

        • 9to5Slavery

          I thought they said you can CA mid band and low band or upper mid band and low band together? And even if it can not travel far, they must be some trade offs to even make it past what it can’t reach. I do understand the concept, though I believe in concepts that we have not yet understand yet.

        • Will

          You can aggregate mid and low together. However, physics limits the reach of mid and high bands. So at some point, you may only have coverage with low band. Anything under 1Ghz is considered low band. What can be done is to space the towers closer together. Then you will have greater range of the high bands (AWS 1/3).

      • Randy’s Buddy

        It will likely take longer than one year for existing users and broadcasters to vacate those airwaves.

        On top of that, to my knowledge, ericsson nor nokia have 600MHz compatible equipment… Plus 600MHz antennas have to be installed on each of the 30,000 tower infrastructure; assuming that every tower can pass local and state civil engineering requirements for the equipment and its weight.

        It’s a 3 to 5 year project; not including getting customers to upgrade.

        • Jay Holm

          This has been in the planning for way, way too long!!!!! No excuses for the broadcasters to not be ready!!!!

  • Randy’s Buddy

    Todos los empleados deben lavarse las manos antes de comentar.

    • Enrique Escobar

      just did.
      now what?

      • MadJoe

        Dry them

    • Acdc1a

      Todos los trolls deben bañarse bajo el puente antes de comentar.

  • RLB63

    For those commenting on how long it takes to roll out 600….

    T-Mobile has been upgrading fast. They want the rural coverage that 600 will provide.

  • guest

    Here’s a term we should start using: Extended Thin LTE.

  • Jay Holm

    Their going to need a whole lot more than $2bln! Hey T-Mobile, my S7 is capable of tri-band carrier aggregation! How bout deploying that in Houston!

  • illstplaya .

    What band is 600?

    • Durandal_1707

      I don’t think there is one, yet. It’s still pretty early days for 600.

  • Irfan

    so mean they are very serious to f-up verizon.

  • Joe

    Maybe this is to fortify the network when they push out 5G. The carrier that gets 5G out first and working like it should be working will have a major advantage over the other three.