Verizon Wireless Pays $3.6 Billion to buy Spectrum putting pressure on AT&T

Verizon Wireless agreed to buy $3.6 billion worth of spectrum from a consortium of cable companies, ratcheting up pressure on AT&T as it fights to salvage its deal to take over T-Mobile USA. Verizon will gain spectrum covering 259 million Americans and can sell its service in the cable companies’ stores.

From the press release:

“SpectrumCo, LLC, a joint venture between Comcast Corporation, Time Warner Cable, and Bright House Networks, today announced it has entered into an agreement pursuant to which Verizon Wireless will acquire its 122 Advanced Wireless Services spectrum licenses covering 259 million POPs for $3.6 billion. Comcast owns 63.6% of SpectrumCo and will receive approximately $2.3 billion from the sale. Time Warner Cable owns 31.2% of SpectrumCo and will receive approximately $1.1 billion. Bright House Networks owns 5.3% of SpectrumCo and will receive approximately $189 million.”

The deal gives Verizon more capacity as it builds out its high-speed fourth-generation network nationwide, a competitive advantage as AT&T devotes more resources into getting the T-Mobile buyout past regulatory muster. AT&T has said the $39 billion deal, which the Justice Department has sued to block, is crucial to freeing up its network for data-hungry devices such as the Apple Inc. iPhone.

AT&T has met resistance to its plan to acquire T-Mobile because of concerns it would be anticompetitive and raise consumer prices.  If that merger was approved, AT&T would leapfrog Verizon as the largest carrier in terms of customers. Verizon’s spectrum acquisition deal wouldn’t seem to present as much of a regulatory challenge, since the cable companies’ spectrum was otherwise unused.

Verizon said it will pay $2.3 billion to Comcast, $1.1 billion to Time Warner and $189 million to Bright House. The carrier is expected to reach at least 200 million Americans with its 4G network by year-end, compared with about 70 million from AT&T.

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