Leap Wireless (LEAP) put some numbers to its plans to swap spectrum with Verizon Wireless, announcing it would acquire a 12 megahertz patch of spectrum in the 700 MHz band covering Chicago from its larger rival for $204 million and in turn sell various 1.9 GHz and 1.7/2.1 GHz spectrum licenses to Verizon Wireless for $188 million.
As part of the transaction, Leap subsidiary Savary Island Wireless will be selling 1.7/2.1 GHz spectrum to Verizon Wireless for $172 million. Savary will then use proceeds from the sale to prepay its debt to Leap, which Leap will then use to repay the balance on a note that is secured by a portion of the spectrum being sold. Aren’t numbers fun!
According to a filing made with the Federal Communications Commission, Verizon Wireless will pick up more than 36 1.7/2.1 GHz and 1.9 GHz spectrum licenses covering parts of 16 states. In total, Leap would be picking up a license covering 11 million potential customers, while Verizon Wireless will pick up licenses covering 18.7 million pops.
The deal will provide Leap with a nice block of spectrum in a market where it lacked sufficient depth to launch LTE and unloads a number of licenses in markets it had no interest in building out. Leap added that on completion of the deals it will pocket more than $100 million that it plans to use to help fund its LTE plans.
For Verizon Wireless the deal does cost it some valuable 700 MHz spectrum, though it continues to hold 34 megahertz of 700 MHz spectrum covering Chicago, but manages to further bolster its higher frequency portfolio to support current CDMA operations and plans to increase density for LTE services.
Verizon Wireless announced late last week plans to acquire 122 1.7/2.1 GHz spectrum licenses from various cable companies for $3.6 billion. The deals come at a time when Verizon Wireless’ largest rival AT&T Mobility is trying to bolster its spectrum holdings through a contentious attempt to purchase T-Mobile USA to bolster its spectrum portfolio.
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