Under the agreement, Verizon will give T-Mobile spectrum that covers about 60 million people. T-Mobile, in exchange, will give Verizon spectrum covering 22 million people along with cash. Both companies will use their new spectrum holdings to expand their 4G high-speed Internet networks.
The companies said the spectrum is in the AWS, or Advanced Wireless Services, band. Financial details weren’t disclosed.
Importantly, the deal removes an obstacle to Verizon’s $3.6 billion bid for spectrum from cable giants Comcast, Time Warner Cable, Cox and Bright House.
In fact, the deal is contingent on the approval of Verizon’s deal with cable firms. The spectrum Verizon will transfer to T-Mobile will come from the cable firms.
T-Mobile has complained to regulators that the deal between Verizon and cable firms would make the wireless market less competitive and allow Verizon, the nation’s largest wireless provider, to rush even further ahead in the race for wireless consumers.
T-Mobile, the fourth-largest wireless carrier, has complained that it has few options for a path forward to compete with the biggest carriers, who have more spectrum and better coverage.
Analysts said the move will help alleviate concerns by regulators, who may be getting pressure from Congress to ensure that Verizon’s deal with cable companies doesn’t harm consumers.
“We think (Verizon) was either proactive in reaching an agreement with T-Mo or encouraged to do so,” said Kevin Smithen, an analyst at Macquarie Securities. “Either way, this is likely a win-win for both companies.”