Verizon and T-Mobile announced they will be exchanging AWS spectrum with one another in an attempt to shore up their holdings in specific cities as they both look to roll out their 4G LTE networks.
The agreement includes spectrum Verizon is acquiring from cable company consortia SpectrumCo, so it won’t be final until that deal is approved. The operators will exchange spectrum in certain markets, while T-Mobile will pay an undisclosed amount of cash for additional Verizon spectrum. The transfers require FCC approval, something the operators say they expect to receive later this summer.
Yankee Group Principal Analyst Ken Rehbehn comments
“When we predicted network operators' need for spectrum would drive almost all their strategic thinking in 2012, it was just this type of deal we had in mind. For T-Mobile, one day it is lobbying as hard as it can to halt Verizon's SpectrumCo airwaves acquisition; today, it ostensibly becomes part of the deal’s equation. For Verizon, the move represents the practical follow-through on its promise to preemptively divest itself of some spectrum to help grease the tracks toward approval of its sweetheart of a deal with the cable industry.
“Today's deal is vitally important for T-Mobile and furthers its effort to go it alone in the wake of its failed merger with AT&T. Out of the embers of that deal, it picked up a ton of AWS spectrum from AT&T to fuel its LTE ambitions. The deal with Verizon is complementary, enabling it to acquire additional AWS spectrum covering upwards of 60 million people, mostly in large cities in the East and Midwest. The end result if the FCC approves both the SpectrumCo and now this spectrum swap? Verizon will have the industry's strongest spectrum position, thanks to its bold cable deal. And T-Mobile will now have enough raw spectrum assets to make a go of it with its go-it-alone ‘challenger’ strategy—while also, not coincidentally, making it an even stronger merger or acquisition partner if it believes further consolidation is necessary to challenge AT&T and Verizon.”
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