* T-Mobile to get access to 60 mln people
* T-Mobile to pay Verizon in spectrum and cash
* T-Mobile gives up opposition to Verizon Wireless' cable
By Nicola Leske
NEW YORK, June 25 Verizon Wireless and
Deutsche Telekom's U.S. unit have agreed to a
spectrum deal that may clear the way for the U.S. company's
plans to buy a chunk of spectrum from cable providers.
The agreement, which needs approval by the Federal
Communications Commission (FCC) and the Department of Justice,
included exchanges of spectrum between the two carriers and a
cash payment from T-Mobile USA, the companies said on Monday.
They declined to divulge financials of the deal but analysts
estimated that T-Mobile USA would pay around $260 million.
In addition, T-Mobile USA said it had given up its
opposition to Verizon Wireless' proposal to buy spectrum from
A T-Mobile USA spokeswoman said that "our agreement with
Verizon will alleviate the public interest harms of their
transaction with the cable companies as originally proposed",
adding that "with FCC approval of these divestitures, we now
support prompt approval of Verizon's transaction along with our
Verizon Wireless had said in April that it plans to put a
chunk of wireless spectrum up for sale, potentially improving
its chances of gaining regulatory approval to buy about $3.9
billion worth of wireless airwaves from cable companies
including Comcast Corp and Time Warner Cable Inc
The spectrum buy would be part of broader agreements to
create a joint venture and allow the cable operators to resell
Verizon's mobile service.
That plan was opposed by several smaller rivals -- among
them T-Mobile USA -- who had complained to the FCC about the
bigger company's cable deal on concerns that it would give too
much market power to the already dominant company.
Some analysts suggested that Verizon had reached out to
T-Mobile USA to clear the way for FCC approval.
"T-Mobile was the most vocal SpectrumCo deal opponent
remaining and we think Verizon was either proactive in reaching
an agreement with T-Mobile or encouraged to do so," Macquarie
Equities research said in a note, adding that "either way, this
is likely a win-win for both companies".
T-Mobile USA, the No. 4 U.S. carrier, has been scrambling to
improve its business and stem customer losses, exacerbated by a
nine-month period in 2011 when it was focused on seeking
approval for a proposed $39 billion takeover by AT&T
which collapsed in December.
The deal would improve its position in some parts of the
United States because it will receive spectrum covering 60
million people in exchange for spectrum given to Verizon
Wireless covering 22 million people
"As a result of this transaction, T-Mobile USA will gain AWS
(Advanced Wireless Services) spectrum in many regions of the
Northeast where it has historically had a weak portfolio, and
give up small portions of spectrum in California where it has
ample spectrum holdings," Bernstein analyst Robin Bienenstock
Consumer advocacy group Public Knowledge said the agreement
between T-Mobile USA and Verizon proved that Verizon Wireless'
cable spectrum -plans would not be beneficial for consumers.
"That Verizon Wireless feels the need to buy off T-Mobile to
close its spectrum/marketing deals with the country's largest
cable operators underscores just how bad this deal really is for
American consumers and competition generally," said Harold Feld,
legal director at Public Knowledge.
"As Public Knowledge has consistently pointed out, the true
danger lies not only in the concentration of spectrum in the
hands of the leading wireless provider, but with the cozy,
cartel-like arrangements between Verizon, Comcast, and the other
MSOs (Multi System Operators) party to the deal," he added.