T-Mobile scoops up some of U.S. Cellular's AWS spectrum for $308M

T-Mobile US (NYSE:TMUS) said it will buy 10 MHz of AWS spectrum from U.S. Cellular (NYSE:USM) for $308 million in cash, bolstering its spectrum portfolio as it seeks to expand its LTE network using AWS airwaves.

The spectrum covers a total of 32 million POPs in 29 markets in the Mississippi Valley region, including Kansas City, Louisville, Memphis, Nashville, New Orleans and St. Louis. T-Mobile said the additional spectrum will allow it to launch "an incremental roll-out" of LTE network coverage to new markets and expand its existing LTE bandwidth in the region.

U.S. Cellular said it will partition and retain a portion of the license covering its markets in Knoxville and eastern Tennessee "to meet future operating needs." 

The agreement comes a little more than a month after U.S. Cellular closed a deal with Sprint Nextel (NYSE:S) for $480 million, in which U.S. Cellular sold PCS spectrum and offloaded its Chicago, St. Louis, central Illinois and three other Midwest markets to Sprint.

The deal between T-Mobile and U.S. Cellular needs to be approved by the FCC and Department of Justice and the companies expect it to close in the fourth quarter.

"In today's marketplace, spectrum is gold," T-Mobile CEO John Legere said in a statement. "This is a rare opportunity to secure precious AWS spectrum in key markets that will immediately be put to use by both T-Mobile and MetroPCS customers. This deal expands our network and capacity, allowing for a broader roll-out of 4G LTE and an even faster and more reliable 4G experience for our customers--in addition to spurring competition in the wireless marketplace."

"Following the market divestiture that closed in May (to Sprint), we have been seeking opportunities to monetize other non-strategic assets," U.S. Cellular's new CEO Kenneth Meyers said in a statement. "We're pleased to have achieved significant value for this spectrum license, as we continue to evaluate opportunities to create additional value for our shareholders."

For U.S. Cellular, the deal is an opportunity to gain cash and shed spectrum in markets where it is pulling back. For T-Mobile, the deal will give the carrier even more spectrum depth than it had following the close of its merger with MetroPCS. T-Mobile is using its AWS spectrum for LTE, and while it has pledged to cover 100 million POPs with LTE by mid-year and 200 million by year-end, the company has not given an official update on which markets beyond its initial seven are to be covered by LTE.

Meanwhile, T-Mobile sent invitations to the media for an event in New York City on July 10. T-Mobile said it will unveil "our boldest moves yet" at the event. It's unclear what that refers to, though T-Mobile does have two new device launches coming up, for the Nokia (NYSE:NOK) Lumia 925 and Sony Mobile Communications' Xperia Z. Additionally, T-Mobile could make a new announcement about pricing and expand on its Simple Choice no-contract model. Under the model, customers can buy devices for the full cost up front, make a down payment and then pay off the device in installments or bring their own compatible device to the network.

Legere told CNET in late March when the Simple Choice plans were unveiled that the carrier was considering the idea of an upgrade club that would allow for "anytime upgrades," which would be a maximum of two device upgrades per year. Customers would pay a "very small" membership fee. Legere said the idea was not finalized and might not come to pass, but that the carrier could experiment with that kind of an idea. "We're going to innovate in this space," he said at the time. "This model will allow us to do that."

For more:
- see this T-Mobile release
- see this U.S. Cellular release
- see this Crain's Chicago Business article
- see this Cnet article
- see this Engadget article

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