Verizon (
VZ
) announced a $1.9 billion offer from AT&T (
T
) to buy spectrum licenses for 18 states. According to a
press release from Verizon
, the company will sell 39 lower 700 MHz B Block licenses for cash
and transfer from AT&T to Verizon of AWS (10 MHz) licenses in
certain western markets, including Los Angeles, Phoenix, Fresno and
Portland, Oregon. As part of the deal, Verizon will sell 700Mhz B
Block licenses covering Charlotte, Greensboro and Raleigh-Durham
markets to Grain Management for $189 million and will subsequently
lease AWS license covering Dallas, Texas from Grain, which is
acquiring it from AT&T.
See our complete analysis for AT&T here
AT&T In Acquisition Mode For Spectrum
The announcement of this deal comes right after AT&T
announced a $780 million all-cash acquisition of Atlantic
Tele-Network's rural retail business that operates under the brand
name Alltel. Alltel has a rural presence spanning six states:
Georgia, Idaho, Illinois, North Carolina, Ohio and South Carolina.
As part of the deal, AT&T will acquire the 585,000 existing
subscribers along with wireless, network access and retail
stores.
AT&T has been on an aggressive push to catch up with Verizon
in the wireless business. AT&T had net additions of 780,000 for
postpaid customers in 4Q12. When compared to the 2.1 million that
Verizon added in the same period (see
Verizon's Smartphone Growth Lifts Results Despite
Weak Wireline
), it is clear that AT&T is losing out to Verizon in new
customer additions. In 2012, AT&T added 1.4 million postpaid
subscribers while Verizon added a staggering 5 million new
subscribers. At the end of 2012, Verizon had 92.5 million
subscribers compared to 70.5 million for AT&T.
We expect further spectrum acquisitions from AT&T as it
looks to improve its 4G-LTE network to compete with Verizon. This
will have impact on CapEx, and we feel it will continue to remain
high as AT&T battles it out with Verizon for the industry
leader position.
What's In It for Verizon
With this sale, Verizon will be complying with its FCC deal in
2012 to sell extra spectrum that it had following acquisitions from
cable companies. While the carriers are hopeful the deal will be
approved by FCC, some consumer groups have been vocal against what
they perceive as a growing duopoly. We will have to wait to see how
the FCC responds to this purchase, but for now it looks like
AT&T is set to continue its aggressive push to grow its 4G-LTE
coverage.
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