T-Mobile (NASDAQ: TMUS) announced in an 8K filing on Tuesday that it had entered into a License Purchase Agreement to acquire 600 MHz spectrum from Philadelphia-based Comcast (NASDAQ: CMCSA) for total cash consideration of between $1.2 billion and $3.3 billion. The final price will be based on the number of available licenses that are included in the sale. Subject to various customary conditions and FCC approval, the companies expect to make the requisite license transfer filings with the FCC in the first half of 2027. T-Mobile expects the deal to close in the first half of 2028.
The deal is mutually beneficial. Both companies acquired 600 MHz licenses in the FCC Broadcast Incentive spectrum auction in 2017. T-Mobile was the big winner in that auction, spending nearly $8 billion to acquire 10 MHz licenses in 414 of the total 416 PEAs, giving it the low band spectrum needed for nationwide coverage. T-Mobile uses that 600 MHz spectrum for its 5G Extended Range service that now covers 98 percent of the U.S. population. Buying additional 600 MHz licenses from Comcast allows T-Mobile to fill in any uncovered spots in key markets.
In that same auction, Comcast spent $1.7 billion for 600 MHz licenses in 72 PEAs, ostensibly covering its cable properties around the country. Operating as a Verizon (NYSE: VZ) MVNO under its Xfinity Mobile brand, Comcast today offers wireless services to its cable subscribers as part of a broadband bundle.
In acquiring spectrum, the company has indicated that it is planning to selectively deploy its own wireless infrastructure in high traffic markets, Inside Towers reported. Comcast has made clear that owning a wireless network would allow it to offer enhanced mobile services but that it does not intend to compete head on with the national wireless carriers. Rather, owning its own infrastructure would allow it to reduce its mobile operating costs while lessening its dependence on Verizon.
To that end, Comcast was the fourth biggest winner in FCC Auction 105, spending $459 million for 830 CBRS 3.5 GHz licenses in 306 counties that again overlay its cable properties. Mid-band CBRS spectrum allows Comcast to take what it calls a “capital lite” approach to building wireless infrastructure using Samsung CBRS strand-mounted small cells that it can readily install along its aerial cable plant in neighborhoods, Inside Towers reported.
By contrast, deploying 600 MHz would require leasing space on towers and installing macro cell sites for the spectrum to be used effectively. That is a big reason that Comcast has let its 600 MHz licenses lay fallow since the 2017 auction. Selling those licenses to T-Mobile will allow Comcast to recover its initial investment and use those funds for other infrastructure projects.
In selling to T-Mobile, Comcast has the right to remove any or all of a certain specified subset of so-called “Optional Sale Licenses” from the License Purchase Agreement at any time before the companies make the required FCC transfer filings. Removing any Optional Sale Licenses would reduce the final purchase price from $3.3 billion by the assigned value of each license.
The geographic areas covered by the Optional Sale Licenses that may not be removed from the License Purchase Agreement are markets covering approximately 39 million POPs, including New York, Orlando, and Kansas City, MO. Other areas covered by the Optional Sale Licenses are markets with approximately 110 million POPs including Chicago, San Francisco, Baltimore/Washington, Boston, Miami, and Nashville. Each market’s license covers 10 MHz, except for Nashville which covers 20 MHz.
By John Celentano, Inside Towers Business Editor