Wheelings & Dealings: T-Mobile Will Acquire 700MHz A-Block from Verizon Wireless

Back in December, a Federal Communications Commission document showed that Verizon Wireless and T-Mobile had agreed to swap Advanced Wireless Services (AWS) and Personal Communications Services (PCS).

On January 6 it was announced that T-Mobile along with T-Mobile License, LLC have signed an agreement that confirms the above. It looks like T-Mobile will acquire particular 700 A-Block spectrum licenses from Verizon Wireless.

The combination of Verizon’s 700 A-Block licenses along with its existing A-Block holdings in Boston will allow T-Mobile to have important low-band spectrum. In fact, this transaction will give T-Mobile low-band spectrum in nine of the top 10 markets across the U.S. This in turn means that T-Mobile will have 21 of the top 30 markets.

In return, Verizon will receive $2.365 billion in cash. In addition, T-Mobile will transfer certain AWS and PCS spectrum licenses to Verizon. It is estimated that these licenses will have an aggregate value of around $950 million.

Low-band spectrum has been known to substantially improve in-building coverage. It also improves coverage in rural areas. It can travel greater distances than high-band spectrum which makes it a more efficient way to provide coverage at the edge of cities and in less densely populated areas.

When Verizon’s A-Block is combined with T-Mobile’s existing Boston A-Block holdings, it will have low-band spectrum that covers just fewer than 160 million people. This includes areas in New York, Los Angeles, Dallas, Houston, Philadelphia, Atlanta, Washington D.C. and Detroit.

There is still a lot of work that needs to be accomplished before moving ahead. However, T-Mobile anticipates rolling out service and compatible handsets on this A-Block spectrum as early as the fourth quarter of 2014.

One reason for this is the fact that all of these agreements still have to formally be approved by the FCC, as well as the Department of Justice. In addition, there are a couple of other closing conditions that are customary in this type of situation. Once the FCC gives its approval, all of the other transactions are expected to conclude sometime around summer.

T-Mobile President and CEO John Legere 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.”

One additional element to this transaction between Verizon Wireless and T-Mobile is that both companies will realign spectrum blocks in certain markets. The primary markets that will be affected are northern California and the Atlantic area.