AT&T (NYSE:T) is considering buying Verizon Wireless' (NYSE:VZ) lower 700 MHz A Block spectrum, according to a Wall Street Journal report. The result could be a bidding war between AT&T and T-Mobile US (NYSE:TMUS), which has reportedly also been interested in the airwaves.
The report, citing unnamed sources familiar with the matter, did not indicate how strong AT&T's interest is. Last month Reuters reported that T-Mobile had approached Verizon about buying some of its spectrum, presumably the A Block. The Journal report also indicated T-Mobile is interested. Last month T-Mobile raised $3.8 billion in debt and stock sales to increase its war chest for spectrum.
AT&T, Verizon and T-Mobile declined to comment, according to the Journal.
Speaking at an investor conference last month in Barcelona, Verizon Communications CFO Fran Shammo reiterated that Verizon is open to selling the A Block at the right price. "The A spectrum is out there, and if someone walks up to me with an offer, we will entertain it," he said referring to the 700 MHz A Block. "This is not a fire sale though, so if we don't get the right offer, we'll deploy the spectrum in our own network."
In September, AT&T closed a deal with Verizon to buy licenses in the 700 MHz B Block for $1.9 billion. Under that deal, Verizon sold 39 700 MHz B Block licenses in 18 states to AT&T in exchange for a payment of $1.9 billion and the transfer by AT&T to Verizon of 10 MHz AWS licenses in certain western markets, including Los Angeles, Phoenix, Fresno, Calif., and Portland, Ore. Verizon is using AWS spectrum to augment capacity on its LTE network.
AT&T's pursuit of Verizon's A Block is notable in light of the fact that in October the FCC approved an order to implement a 700 MHz interoperability solution that will eventually give smaller carriers using the A Block access to the same 700 MHz LTE devices AT&T now uses, a move AT&T had resisted for years.
Verizon paid $2.4 billion for its A Block licenses, and companies interested in buying the spectrum would likely need to pay that much if not more, according to analysts.
For T-Mobile, a bidding war with its fiercest competitor could complicate its plans to acquire more spectrum. T-Mobile decided not to bid for the 1900 MHz PCS H Block, which the FCC is auctioning in January, presumably keeping its powder dry for the incentive auctions of 600 MHz broadcast spectrum scheduled to start next year, or the AWS-3 spectrum auction, which will be for spectrum that fits well with T-Mobile's current AWS holdings.
- see this WSJ article (sub. req.)
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