U.S. telecom giant
) has entered into an agreement with Verizon Wireless to acquire
spectrum licenses. Verizon Wireless is a venture between
Vodafone Group Plc
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Per the deal, AT&T will shell out $1.9 billion and offer
Advanced Wireless Services (AWS) spectrum licenses in five
markets to Verizon. In exchange Verizon will hand over 39 lower
700 megahertz (MHz) licenses to AT&T, covering 42 million
people in 18 states including major territories such as Chicago,
Los Angeles and Miami.
After the deal to acquire T-Mobile USA for $39 billion failed to
succeed due to regulatory opposition, AT&T has been eyeing
various spectrum transactions. This acquisition comes close on
the heels of AT&T's plans to buy the remaining portion of
Alltel's wireless operations from
Atlantic Tele-Networks Inc.
) for a cash consideration of about $780 million. These
operations include spectrum licenses, retail stores and network
AT&T aims to enhance its high-speed wireless network in order
to generate more profits from the surging demand for mobile
Internet services for smartphones, tablets and other devices. The
company is on track to deploy 4G Long-Term Evolution (LTE)
services to people as fast as possible and achieve the set target
to connect 300 million people in the U.S. by 2014 end.
Along with this acquisition, AT&T will sell a single AWS
license to Grain Management. The former will also lease 700 MHz
spectrum from Grain Management across three markets.
On the other hand, the country's largest carrier - Verizon - is
parting with the spectrum that it was not using to gather funds
for buying a big belt of spectrum from a consortium of cable
However, this deal is under the scrutiny of various regulatory
bodies that have expressed concerns over the concentration of
high-class wireless signal airwaves in the hands of the two top
telecom companies in the U.S.
The deal is yet to receive approvals from the Federal
Communications Commission and the Department of Justice. Both
AT&T and Verizon expect the transaction to be closed in the
latter half of 2013.
We currently, have a Zacks Rank #3 (Hold) on AT&T and