T-Mobile US spends $3.5 billion on 600 MHz licences

T-Mobile US has acquired two 600 MHz spectrum licences at a total cost of US$3.5 billion, underscoring its commitment to add low-band frequencies to its 5G network.

The US mobile operator announced this week that it will pay $1.9 billion to 51 License and $1.6 billion to LB License for a range of spectrum licences covering 108 million pops, or around a third of the US population. It’s picking up between 10 MHz and 30 MHz per market.

T-Mobile did not specify what it will use the spectrum for in its perfunctory statement to the SEC, but it’s pretty clear the frequencies will be part of its 5G service.

Indeed, technically, this is not new spectrum for the telco at all. It already leases the spectrum in question from the sellers, but has now decided to bring it in house.

There’s probably a practical or financial reason for that. But nonetheless the deal comes at an interesting time for T-Mobile US, which is currently taking part in the FCC’s ongoing 2.5 GHz spectrum auction. Not only that, it is also widely tipped to be the only major spender in that sale, which had just concluded round 19 at the time of writing.

The bidders had together pledged $195.8 million at the end of that round and demand still exceeds supply in a fair number of areas…but that’s really all we know at this stage.

There are 82 qualified bidders in the auction, but the smart money is on T-Mobile coming away with the lion’s share of the spoils. As Sasha Javid, chief operating officer at BitPath, pointed out when the auction kicked off a fortnight ago, T-Mobile has an advantage in the auction, given that it already leases a fair amount of the frequencies being sold off and is therefore privy to information the other bidders do not have. Further, Verizon and AT&T are concentrating on integrating their C-band spectrum into their 5G networks, and are unlikely to be looking at picking up more 600 MHz frequencies.

Despite that, the auction rumbles on and while it is not going to hit the tens of billions of dollars we saw in the C-band sale, we’re now just about into the hundreds of millions, and that’s no small sum.

“Is $300 million still in the cards?” Javid asked when round 19 drew to a close. “I guess we will have to stay tuned.”

As well as impressive customer growth, the first quarter also saw T-Mobile spend $8 billion on 31 MHz of 600-MHz spectrum covering 100% of the country, in the recently-concluded incentive auction.

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