Verizon open to swapping spectrum for 700 MHz A Block

Verizon Wireless (NYSE:VZ) would be open to swapping its lower 700 MHz A Block spectrum for other airwaves, according to Verizon Communications CEO Lowell McAdam.

Verizon executives have been open in recent weeks and months about their willingness to part with the A Block at the right price. However, McAdam told Bloomberg that Verizon would be open to a swap to get other spectrum.

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. The spectrum covers around 150 million POPs, according to New Street Research analyst Jonathan Chaplin.

T-Mobile US (NYSE:TMUS) raised $3.8 billion in debt and stock sales last month to increase its war chest for spectrum and is reportedly interested in Verizon's A Block spectrum holdings. In securities filings, T-Mobile has said it is interested in "opportunistically acquiring additional spectrum in private party transactions" and also that it wants low-band spectrum.

Speaking today at the UBS Global Media & Communications Conference, T-Mobile COO Jim Alling reiterated those points. He said that T-Mobile is "opportunistic when it comes to anything that could be available to improve our spectrum holdings," and that "low-band spectrum is very important for us." T-Mobile is the largest holder of mid-band AWS spectrum, which it is using to deploy its LTE network. Verizon acquired nationwide AWS holdings last year from a group of cable companies, and is using those airwaves to add extra capacity to its existing 700 MHz C Block LTE network.

It's possible that T-Mobile and Verizon could swap spectrum. After all, the companies did so for AWS airwaves in the summer of 2012 as part of Verizon's cable deal. "We are always looking at opportunities in the secondary market," Alling said, adding that low-band spectrum would not just help T-Mobile expand its network reach into more suburban and rural areas but would also improve inbuilding coverage in urban areas.  

Last week the Wall Street Journal reported that AT&T (NYSE:T) is considering buying Verizon's A Block spectrum, which could set up a bidding war between AT&T and T-Mobile. However, it's unclear how interested AT&T actually is in buying the airwaves.

For more:
- see this Bloomberg article

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