January 25, 2013
AT&T Agrees To Buy Verizon Spectrum
Michael Harper for redOrbit.com — Your Universe Online
AT&T is continuing their spectrum grab, buying up as much spectrum as their stockpiles of cash can afford them. Today, AT&T has agreed to spend another $1.9 billion to buy spectrum licenses from their main rival, Verizon Wireless. This spectrum covers some 42 million people in 18 states. In addition to the $1.9 billion, AT&T has also agreed to trade some of their own spectrum to sweeten the deal. This deal now awaits regulatory approval, but is slated to close in the second half of 2013.
The spectrum in question falls in the B blocks of Verizon´s 700-megahertz band. AT&T has said they plan to trade some of their AWS bands for Verizon´s spectrum.
Areas such as California, Chicago, Colorado, Florida, New York and Virginia are all covered under Verizon´s B block. These include some high traffic areas, like Miami and Los Angeles.
This move is a part of Verizon´s plan to auction off their spectrum in both the A and B blocks of their 700-megahertz licenses.
This news comes just days after AT&T announced they´d pay $780 million to buy Alltell, a purchase which gives AT&T 585,000 more customers and the spectrum to go along with them.
These early year moves follow a busy 2012, which saw AT&T sign 50 different spectrum deals in order to expand their holdings by one-third, according to CEO Randall Stephenson, during the telecom company´s quarterly earnings call on Thursday.
In a statement to Reuters, Wells Fargo Analyst Jennifer Fritzsche has said this move appears to be positive for both AT&T and Verizon.
"While on the surface this appears to be a rich price, we would note that the B block licenses that AT&T is acquiring are concentrated in major metropolitan markets," said Fritzsche.
Though this move may be good for both companies, some analysts hold that AT&T will still have some catching up to do once this deal finally goes through the approval process. According to Jonathan Chaplin, an analyst with New Street Research LLP, this is good forward momentum, but AT&T will need to go further if they want to beat Verizon.
"AT&T is in a materially worse spectrum position than Verizon," said Chaplin in a statement to the Wall Street Journal.
"Even after this transaction, AT&T will have less spectrum per [subscriber] than all three national carriers.”
Many expected AT&T to go after this certain block of spectrum, as it fits nicely with their existing blocks.
"It would have been disappointing to see this spectrum go to another player when the dominant trend in spectrum has been the consolidation of the bands," continued Ms. Fritzsche.
For their part, Verizon stands to walk away from the deal 39 block B licenses lighter. They´ll also receive some of AT&T´s AWS licenses in the western market in areas such as Fresno, Los Angeles, Phoenix and Portland, Oregon.
A Verizon spokesperson has said they´re “still exploring various options” for their A block of spectrum. The company is looking for a fair price for this spectrum and has said any unsold blocks will be used to boost their mobile broadband services.
Though these companies are in a grab to acquire the most spectrum, it is unlikely customers will notice a change in their AT&T and Verizon service.