T-Mobile US is looking to buy wireless airwaves from larger rival Verizon Wireless to bolster its mobile network capacity for data services, a source familiar with the matter said on Tuesday.
While T-Mobile (Bellevue, WA, USA) has approached Verizon (New York City, NY, USA) about buying the spectrum, the process is still in the early stages, according to the source, who asked not to be named. The source was not authorized to discuss the matter.
T-Mobile, the No. 4 U.S. mobile service provider, might have to pay as much as $3 billion for the airwaves, which are not being used by Verizon, according to one analyst estimate. The airwaves would give T-Mobile additional network capacity to help it catch up with its bigger rivals in delivering high-speed wireless services.
T-Mobile declined to comment on Tuesday. Representatives for Verizon Wireless, which is owned by Verizon Communications Inc and Vodafone Group Plc (Newbury, UK), were not immediately available for comment.
T-Mobile, which is majority owned by Deutsche Telekom (Bonn, Germany), had said on November 12, in its announcement of an equity offering to raise money for spectrum deals, that it was considering buying airwaves from a private party but did not name the potential seller.
Verizon Communications, the majority owner of Verizon Wireless, had recently indicated that it could consider selling so-called A Block airwaves in the 700 megahertz frequency band as it is not using these airwaves.
The company had already tried to sell the same spectrum last year but Verizon Chief Financial Officer Fran Shammo said at an investor conference last week that it did not get a high enough offer. Shammo said the company would not conduct a "fire sale" and that if it did not reach a deal that made sense, Verizon Wireless would instead use the airwaves.
T-Mobile raised $1.8 billion through a sale of its common stock last week and offered $2 billion in bonds on November 18 with the expected aim of funding future spectrum purchases.
The company has said that it would like to increase its spectrum holdings to improve its high-speed wireless services.
Several analysts have speculated that the A Block spectrum is the asset that would make the most sense for T-Mobile to buy.
Verizon has agreed to buy Vodafone's 45 percent stake in their Verizon Wireless venture for $130 billion in a deal that is expected to close in early 2014.
(Additional reporting by Nicola Leske, Soyoung Kim and Harro Ten Wolde; Editing by Chris Reese)