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AT&T looking to buy all of Sprint's 2.3 GHz WCS spectrum licenses, possibly for in-flight Wi-Fi

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AT&T Mobility (NYSE: T) has inked an agreement to purchase all of Sprint's (NYSE: S) WCS spectrum licenses. Sprint owns 19 2.3 GHz WCS licenses in locations across the South including in markets in Florida, Louisiana, Texas, Alabama, Georgia and elsewhere.

The companies did not disclose the financial details of the transaction, which still requires FCC approval. Representatives from both AT&T and Sprint declined to comment beyond the companies' FCC filing on the transaction.

This is the latest bunch of WSC licenses AT&T has purchased. In 2012, the carrier paid $600 million for a broad swath of WCS licenses from NextWave Wireless, a transaction that BTIG analyst Walter Piecyk tweeted equates to around $0.40 per MHz per POP. AT&T has also purchased WCS licenses from Comcast, Horizon Wi-Com and San Diego Gas & Electric Company.

It's unclear exactly what AT&T will do with the licenses. However, AT&T last month said it will use LTE technology and some of its spectrum to offer in-flight Wi-Fi services starting in late 2015, an action that will directly challenge current in-flight connectivity players like Gogo, Row 44, Inmarsat and others. BTIG's Piecyk noted at the time that AT&T said it is considering using its WCS spectrum for the in-flight service, but hasn't decided on that yet. AT&T would need FCC and FAA approval for an in-flight connection service.

AT&T could also use its growing portfolio of WCS spectrum to bolster the capacity of its LTE network, which currently runs across its 700 MHz and AWS spectrum holdings.

In its filing with the FCC on the transaction, AT&T noted only that it would use Sprint's WCS spectrum for "mobile broadband use, thereby supporting [the Commission's] goal of expanding mobile broadband deployment throughout the country."

AT&T also noted that, if the transaction is approved, it would hold up to 165 MHz of spectrum in some of the markets covered in the deal, thus putting it over the FCC's so-called spectrum screen. The FCC's spectrum screen is designed to limit the total amount of spectrum any one company can own in a specific market. AT&T said it would exceed the FCC's initial spectrum screen in 31 of the 713 total counties covered by Sprint's 19 licenses, though AT&T argued that there is still spectrum available for its rivals in those markets and that it should not be prevented from acquiring the WCS licenses. That AT&T mentioned the FCC's spectrum screen is notable considering the agency is currently evaluating changes to its screen in an effort to prevent larger carriers from purchasing overwhelming amounts of spectrum.

AT&T's purchase of the WCS licenses underscores AT&T's strategy of purchasing spectrum on the secondary market, rather than directly through FCC auctions. AT&T has purchased AWS, WCS and 700 MHz licenses from a wide range of smaller companies in recent years. The carrier is also considering participating in the FCC's upcoming auctions of AWS-3 and 600 MHz spectrum.

As for Sprint, it comes as little surprise that the company is offloading its WCS licenses. Sprint has focused its LTE network buildout on its 800 MHz, 1900 MHz and 2.5 GHz spectrum holdings.

For more:
- see this FCC filing (PDF)

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