With its bid for T-Mobile officially over, AT&T faces a spectrum crunch exacerbated by the slowness of regulators to approve its earlier spectrum deal with Qualcomm, even as the wireless carrier is forced to part with advanced wireless solutions spectrum.
AT&T's loss of AWS spectrum is a break-up provision in the merger contract it signed with T-Mobile's parent company, Deutsche Telekom, last March. T-Mobile's AWS spectrum windfall, courtesy of AT&T, will provide coverage in 128 U.S. cellular markets, including Los Angeles, Atlanta, Baltimore, Boston, Dallas, Denver, Houston, Phoenix, San Diego, San Francisco, and Seattle.
Rival Verizon Wireless has already made several moves to take advantage of AT&T's AWS spectrum loss. Cox Communications said last Friday that it has agreed to sell Verizon its 20 megahertz AWS spectrum licenses covering 28 million points of presence (PoP) in exchange for $315 million.
Though AT&T is facing a spectrum crunch, "it doesn't strike me that ATT will capitulate to Verizon Wireless," said Lisa Pierce, Gartner 's managing vice president of unified communications and network services.
"The loss of T-Mobile will spur ATT's LTE-related capital expenditure spending -- to rapidly implement LTE, LTE-Advanced and VoLTE -- especially on the 700 megahertz band," Pierce said in an e-mail Thursday. "This likely shift is welcome news to ATT's key network suppliers."
A Full LTE Blitz
AT&T's cash reserves will take a hit when AT&T posts a pretax accounting charge of $4 billion at the end of the fourth quarter to reflect the T-Mobile deal's break-up considerations. Still, AT&T had over $10 billion cash on hand at the end of the third quarter of 2011.
"Our strong cash flow gives us the flexibility to invest in our business , to retire debt and to continue to return substantial value to shareholders," AT&T CEO Randall Stephenson told investors last October. (continued...)
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