T-Mobile US Inc. agreed to buy airwaves from Verizon Wireless for about $2.4 billion in cash as part of a spectrum swap that will give both companies more network capacity in areas where they need it.
T-Mobile, the fourth-largest U.S. wireless carrier, will purchase 700-megahertz A-block spectrum licenses from Verizon, according to a statement Monday. As part of the exchange, Verizon, the largest U.S. wireless carrier, will get so-called AWS and PCS licenses, which have a combined value of about $950 million.
The deal will provide T-Mobile with a big swath of low-band frequencies — a type of spectrum that Chief Operating Officer Jim Alling has said are the missing piece of its network coverage. Verizon, meanwhile, can use T-Mobile’s so-called AWS airwaves to relieve congestion in cities where network performance has suffered due to heavy traffic.
The transaction also may make T-Mobile a more attractive takeover target, said Markus Friebel, an analyst at Independent Research GmbH in Frankfurt. SoftBank Corp. has discussed merging T-Mobile with its own U.S. carrier, Sprint Corp., according to people familiar with the matter. The plan would be to take control of T-Mobile by paying cash for the 67 percent stake owned by Deutsche Telekom AG, said the people.
The deal “will make T-Mobile a more viable operator, but also a more attractive acquisition target,” Friebel said in an interview.
The airwave transactions, along with T-Mobile’s existing A-block holdings in Boston, will give T-Mobile low-band spectrum in nine of the top 10 markets across the U.S., according to the statement.
“This is a big transaction for T-Mobile, but there are still additional pieces of low-band spectrum it can buy to complete the portfolio,” said Walt Piecyk, an analyst at BTIG LLC in New York.