What T-Mobile’s Spectrum Deal with AT&T Means for Coverage Growth



T-Mobile’s spectrum deal

T-Mobile (TMUS) continues to boost its low-band spectrum holdings. According a recent press release, the carrier has signed a deal to get a 700 MHz (megahertz) A-block spectrum from a subsidiary of AT&T (T). According to the press release, “Upon closing of the spectrum deal, T-Mobile will have 700MHz A-block spectrum that covers all of the top 10 US markets and is capable of covering 269 million Americans—or 83% of the US population—with Extended Range LTE.”

The press release also stated, “The transaction is subject to regulatory approvals and customary closing conditions and is expected to close in 4Q 2016. Deployment of the new 700 MHz spectrum can begin once the deal has closed.”

In the US wireless space, Verizon Communications (VZ) and AT&T have significant holdings in the low-band coverage spectrums. Sprint (S) and T-Mobile don’t have significant holdings in low-band spectrums.

Coverage on low-band spectrums is especially useful for in-building penetration in urban areas. In rural settings, low-band spectrums help in coverage over large areas.

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Low-band coverage boosts T-Mobile’s market share

Better coverage on the low-band spectrum is positively impacting T-Mobile’s subscriber growth. The wireless carrier’s coverage on the 700 MHz A-Block spectrum continues to increase.

In the MoffettNathanson Media and Communications Summit on May 19, 2016, J. Braxton Carter, T-Mobile’s chief financial officer and executive vice president, mentioned that the coverage on the spectrum reached 195 million people. At the end of 2015, the coverage had reached 188 million people.

For diversified exposure to US telecom (telecommunications) companies, you may consider investing in the SPDR S&P 500 ETF (SPY). SPY had a total of ~2.7% of its holdings in AT&T, Verizon Communications, CenturyLink (CTL), Level 3 Communications (LVLT), and Frontier Communications (FTR) at the end of April 2016.

In the next part of this series, we’ll look at T-Mobile’s value proposition in the US telecom market.


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