Verizon Wireless, a unit of
Verizon Communications Inc.
) reportedly has plans to acquire airwave licenses for major
cities in the U.S. from
). On Apr 8, Verizon made an offer of approximately $1 billion to
$1.5 billion, excluding the present value of airwaves leased. We
believe the odds against this deal remains much higher given the
Sprint Nextel Corp.
), which is a major shareholder in Clearwire and proposes to
acquire the latter.
However, if Verizon acquires these airwaves from Clearwire it
would add to the company's current network expansion plans. The
company is trying to enhance its existing network capabilities to
offer uninterrupted wireless experience to its customers.
In this context, the company is working over spectrum acquisition
that can support expansion plans in data services.
The company has already received approval from the Federal
Communications Commission (FCC) to buy wireless spectrum from
Spectrum Co., which is a joint venture between Comcast
Corporation, Time Warner Cable Inc. and Bright House Networks in
Aug 2012. The deal is priced at $3.9 billion.
To raise funds for this transaction, Verizon struck a deal with
) to sell 39 lower 700 megahertz (MHz) licenses to the latter. In
exchange, Verizon will receive $1.9 billion and Advanced Wireless
Services (AWS) spectrum licenses in five markets.
Additionally, Verizon planned the sale of three separate 700MHz
spectrum blocks to small rural telecommunication firms. We
believe the sale of lower spectrum assets and the consequent
purchase of new AWS spectrum will work in favor of Verizon. The
AWS spectrum holdings will double Verizon's capacity as well as
enable services at a much higher speed and expedite the LTE
rollout, thereby driving data revenues and boosting its
CLEARWIRE CORP (CLWR): Free Stock Analysis
SPRINT NEXTEL (S): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
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