Verizon Wireless and T-Mobile USA strike spectrum sharing deal

26 June 2012 | Kavit Majithia


Verizon Wireless and T-Mobile USA have agreed a spectrum sharing deal that is expected to enhance both companies' 4G roll-out plans.

The deal includes a cash consideration of approximately $260 million paid by T-Mobile USA to access Verizon’s larger spectrum capability.

T-Mobile USA has further confirmed it will drop opposition to Verizon Wireless’ plans to acquire additional spectrum from cable companies. Verizon said in April it would put chunks of its existing wireless spectrum up for sale, in a bid to gain regulatory approval for its plans to acquire $3.9 billion of wireless airwaves from cable companies including Comcast and Time Warner, as part of the SpectrumCo consortium.

For T-Mobile USA, it gives the German-owned company greater leverage in its plans to launch a $4 billion LTE network next year, designed to compete with Verizon, AT&T and Sprint. It has suffered significant customer losses over the past year and has been aggressively targeting improvements to its business followed the failure of AT&T’s proposed $39 billion takeover of the company.

T-Mobile CEO and president Philipp Humm drew on the potential for T-Mobile USA to now compete “even more vigorously with other wireless carriers” as a result of the deal with Verizon. “We anticipate FCC approval later this summer, in time for us to incorporate this new spectrum into our network modernisation and the roll-out of LTE services next year.”

Access to spectrum has been hotly contested in the US telecoms market, as the demand for faster data services continues to grow. The sharing agreement could also include new spectrum made available from Verizon’s deal with SpectrumCo if the move is completed.

The agreement will give T-Mobile coverage to an additional 60 million people while Verizon will extend its access to an additional 20 million people. The agreement is based on the Advanced Wireless Services (AWS) band.

“The agreement with T-Mobile USA is further evidence of the importance of a secondary spectrum market to give companies the flexibility to exchange or acquire spectrum to meet customers’ growing demands for wireless data services,” added Dan Mead, Verizon Wireless’ chief executive.

T-Mobile said the deal will offer improved coverage in 15 US markets, where analysts have previously commented on the company’s poor performance in the past.