Verizon Communications Inc., the largest wireless service operator in the US, is to buy some spectrum licenses from US Cellular Corp for $1bn as the tower operator continues to divest its spectrum-related assets.
US Cellular said in a formal statement on Friday that the deal, along with agreements with two other mobile network operators, depended on the completion of a transaction announced in May to sell part of its wireless operations and some spectrum assets to T-Mobile US Inc.
The news comes as US wireless service companies such as Verizon focus on their core 5G communications business. Last month, Verizon sold the lease rights to thousands of microwave towers in a deal that allowed it to rent back the capacity it needed to continue using the infrastructure of those towers. The arrangement, which is a backhaul capacity deal, allows Verizon to continue using the towers without fully losing its rights to them.
US Cellular had announced a planned transaction with T-Mobile, another major US wireless service company, in May for up to $4.4bn, including cash and debt.
According to the statement, privately held US Cellular controls one of the largest tower businesses in the US. If all the deals are completed, it will still hold some spectrum assets and continue “to opportunistically monetise the retained core assets”.
Spectrum is now the core resource of wireless communication networks, determining the network speeds and coverage that operators can provide. By buying US Cellular’s spectrum, Verizon will be able to further expand its wireless network capacity and signal coverage in the US, especially in areas where network performance needs to be enhanced, which is crucial for improving the quality and user experience of 5G mobile services.
As 5G network technology develops rapidly, wireless service operators are in urgent need of spectrum, especially C-band and millimetre-wave spectrum, which can support faster data transmission speeds and larger network capacity.
Verizon’s main competitors, especially T-Mobile, have enhanced their network coverage through multiple mergers and spectrum purchases in recent years. To maintain its competitive edge in the 5G network services, Verizon needs to increase its spectrum resources to improve network quality and service capabilities.