T-Mobile Swap Gives Verizon Spectrum, $2.4 Billion in Cash

T-Mobile US agreed to buy airwaves from Verizon Wireless for about $2.4 billion in cash as part of a spectrum swap that will give both companies more network capacity in areas where they need it. T-Mobile will purchase 700-megahertz A-block spectrum licenses from Verizon. As part of the exchange, Verizon will get so-called AWS and PCS licenses, which have a combined value of about $950 million.

The deal will provide T-Mobile with a big swath of low-band frequencies -- a type of spectrum that Chief Operating Officer Jim Alling has said are the missing piece of its network coverage. Verizon, meanwhile, can use T-Mobile’s so-called AWS airwaves to relieve congestion in cities where network performance has suffered due to heavy traffic. “This deal proves to be a big win for Verizon, which was able to unload spectrum it bought in 2008 for a big premium,” said Walt Piecyk, an analyst at BTIG LLC. He said Verizon is making a 38 percent profit on the airwaves it acquired in a government auction. Verizon never put the spectrum to use because it built out its network with different frequencies.