T-Mobile (NYSE:TMUS) believes its recent spectrum spending spree will begin to pay dividends this year as it expands its retail footprint into new markets.
The nation's third-largest operator has spent more than $1 billion recently buying 700 MHz A Block licenses from Cellular South, Cavalier, C700 and others to expand its network to previously uncovered areas in Utah, New Mexico, regions in the Southeast and elsewhere. And it's moving hastily to add as many as 400 retail stores to sell devices more effectively in those markets.
"We now cover 305 million people in the U.S. with our 4G LTE footprint, and we think right now we have the opportunity to expand our distribution into another 30 to 40 million POPs here in the U.S. where we have zero penetration. The ecosystem's there," CFO Braxton Carter said at an investor conference this week, noting that every new T-Mobile handset supports 700 MHz.
A T-Mobile spokesperson said most of the new stores will be owned and managed by third-party retail partners. The outlets will increase the carrier's store base by roughly 10 percent.
Carter went on to say that it is working to deploy services on its new spectrum as quickly as possible.
"But remember, a lot of the skepticism about the A Block was, 'How can you really clear that?'" he continued. "We cleared that first 190 million (POPs) all within one year. So we have two-thirds that are completely unencumbered, and a third that we're actually working very rapidly at clearing."
T-Mobile spent $2.4 billion to buy 700 MHz A Block spectrum from Verizon in early 2014. The carrier was able to deploy service on those airwaves quickly despite the fact that the nation's largest carrier hadn't done so, Carter said. So leveraging the recently acquired spectrum shouldn't take much longer, he said.
"I think some of the skepticism is that, you know, Verizon sat on 150 million POPs but they had never done anything to clear it," he claimed. "When we started calling these broadcasters (who once used the spectrum), they said, 'This is the first call we've ever gotten.' It was actually fairly easy and fairly economical to clear it in rapid fashion. So yeah, we think we'll be able to roll out the majority of what we just bought this year."
T-Mobile is expected to be an active participant in the upcoming FCC incentive auction of 600 MHz spectrum, and Carter has previously said the operator may have as much as $10 billion to spend on broadcaster airwaves. But T-Mobile likely won't need to spend that much to pick up the spectrum it wants, he added.
- listen to this T-Mobile webcast
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T-Mobile seen as favorite to win spectrum in 600 MHz auction, but smaller carriers likely to jump in as well
Article updated March 3 to clarify T-Mobile's expansion will be due to an increased retail presence in new markets