Verizon Expands Spectrum Purchases

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on December 7, 2011  

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As Verizon celebrated the first anniversary of its 4G LTE network yesterday, it also confirmed the increase in its spectrum purchases. The company continued to invest in additional spectrum and exchanged spectrum licenses with Leap Wireless for $200 million. Under the terms of the deal, Leap will purchase 12 MHz of spectrum in Chicago from Verizon for $204 million. In turn, Verizon will buy spectrum from Leap for $188 million in a number of U.S markets. The deal is seen as a financial boost for Leap.

“Together, these transactions will allow us to strengthen our spectrum position in our Chicago market and receive net cash proceeds of more than $100 million, after repayment of indebtedness and estimated transaction fees,” Doug Hutcheson, Leap’s president and chief executive officer, said in a statement.

“We plan to use the net cash proceeds to support our ongoing deployment of LTE network technology,” Hutcheson said. “As we have previously announced, we plan to cover approximately two-thirds of our current network footprint with LTE technology over the next two to three years.”

Verizon, with this deal, primarily looks to gain additional spectrum across the country with the expansion of its LTE network. The deal comes only days after Verizon concluded payments with three of the country’s top cable companies of $3.6 billion for 122 spectrum licenses. Under the terms of the deal, Comcast was given $2.3 billion, Time Warner given $1.1 billion and Bright House $189 million for the additional spectrum. The extra spectrum is vital for Verizon as increased numbers of users switch to data- intensive devices such as smartphones and tablets. Verizon’s 4G LTE network has enjoyed success and has wide reach across the nation, covering 198 markets. The additional spectrum will help extend Verizon’s dominance of the LTE market, especially as rivals like AT&T are still embroiled in legal battles regarding its merger with T- Mobile.

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