As rumors continue to swirl about a possible takeover of T-Mobile US (TMUS), the discount wireless provider inked a $3.3 billion deal on Monday to acquire coveted spectrum from Verizon Wireless.
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The transaction is aimed at bolstering T-Mobile’s network as subscribers continue to ramp up data usage and put a premium on speed.
T-Mobile, the No. 4 U.S. wireless player, said the deal will give T-Mobile low-band spectrum in nine of the top 10 and 21 of the top 30 markets in the country.
“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,” T-Mobile CEO John Legere said in a statement.
Under the terms of the deal, T-Mobile agreed to buy certain 700 MHz A-block spectrum licenses from Verizon for $2.37 billion in cash and the transfer of spectrum licenses that have an estimated value of $950 million. That puts the total price tag of the transaction at approximately $3.3 billion.
Low-band spectrum like that acquired by T-Mobile helps improve service inside buildings and in rural areas. The company said it will have low-band spectrum covering about 158 million people, including in major markets like New York, Los Angeles, Dallas and Houston. T-Mobile said it expects to roll out service and devices on this spectrum as early as the fourth quarter of 2014.
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The transaction is subject to approval from the Federal Communications Commission and the Justice Department. The deal is expected to close in mid-2014.
Shares of T-Mobile advanced 0.68% to $32.50 Monday morning.
T-Mobile continues to bulk up in its attempt to catch the market leaders. Last year, it completed a $1.5 billion acquisition of rival MetroPCS.
T-Mobile shares have been in focus in recent weeks amid reports that rival and No. 3 player Sprint (S) could acquire it for $20 billion. The potential deal would have the backing of Japan’s SoftBank, which acquired an 80% stake in Sprint last year for just over $20 billion.
However, such a deal would likely face scrutiny from regulators, which in 2011 blocked AT&T’s (T) $39 billion buyout of T-Mobile.
Last year, Verizon Communications (VZ) announced a monster $130 billion deal to acquire full control of Verizon Wireless from joint venture partner Vodafone (VOD).