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Friday, January 25, 2013

AT&T Will Buy Some Verizon Spectrum for $1.9 Billion

AT&T said on Friday that it had agreed to buy some spectrum â€" the radio waves that carry wireless calls and data â€" from its main competitor, Verizon Wireless.

AT&T said it would pay $1.9 billion for spectrum licenses that would cover 42 million people across 18 states, including California, Colorado, Florida, New York and Virginia. The deal is subject to regulatory approval.

In the wireless industry, this sale was widely expected. In late 2011, Verizon said it had agreed to buy licenses for spectrum from a consortium of cable companies. The Federal Communications Commission demanded clarity from Verizon on what it was doing with some of its leftover spectrum. Verizon later agreed that it would sell some spectrum in order to get approval for the deal with the cable companies.

The spectrum in question is in the 700 megahertz frequency. AT&T’s network already has a high concentration of 700 megahertz spectrum, so naturally the carrier was interested in the purchase. In past investor calls, AT&T had said it was interested in buying Verizon’s spectrum.

Craig Moffett, an analyst with Sanford C. Bernstein & Company, said the transaction had few implications for consumers.

“What we’re witnessing is the horse trading of spectrum bands so all the carriers can rationalize their holdings,” Mr. Moffett said in an interview. But he noted that “more spectrum always tilts the scales in favor of better service.”

AT&T has said it will use the additional spectrum to expand its fourth-generation LTE network, which is faster than its predecessor, 3G. Currently it has LTE deployed in about 135 cities, far behind Verizon, which has LTE in 476 cities.