T-Mobile US (TMUS) To Acquire 700 MHz Spectrum From AT&T

T-Mobile US Inc. (NYSE:T) is gradually expanding its 4G LTE coverage in the U.S. Recently, the company has entered into an agreement with AT&T Inc. (NYSE:T) to acquire spectrum in the 700 MHz band. This will help the company to provide LTE network in the greater Chicago area. AT&T had acquired this license as part of its takeover of Leap Wireless two years ago. Although the financial terms of the T-Mobile US – AT&T deal have been kept under wraps, the transaction is likely to be closed in the fourth quarter of 2016.

In 2014, T-Mobile US acquired 700 MHz spectrum from Verizon Communications Inc. (NYSE:VZ) in a deal worth multi-billion dollar. Ever since that buy, T-Mobile US has systematically increased its 700 MHz airwaves portfolio through 23 transactions. After the completion of the AT&T deal, T-Mobile US will install LTE coverage in the top 10 markets of the U.S.

Notably, in Mar 2016, T-Mobile US sought the telecom regulator Federal Communications Commission’s (FCC) approval for a millimeter wave radio test license using the company’s 28 GHz and 39 GHz frequency bands to conduct a test run of the upcoming 5G wireless standard. The company has formed partnerships with Ericsson (ST:ERICAs) AB (NASDAQ:ERIC) and Nokia (HE:NOKIA) Corp. (NYSE:NOK) to set up field and lab trials for 5G networks. A full-fledged 5G network deployment will not start until 2020.

The U.S. telecom industry has lately emerged as an intensely contested space where success thrives largely on technical superiority, quality of services and scalability. Thus, in order to stay ahead of competition, existing players need to be constantly on their toes to introduce innovative products. At this juncture, we believe T-Mobile US’ decision to expand 4G LTE network and its drive for 5G wireless network will prepare the ground for its future growth. The stock currently carries a Zacks Rank #3 (Hold).