U.S. telecom regulator, the Federal Communications Commission (FCC), recently gave its nod to the proposed wireless spectrum swap deal between T-Mobile US Inc. TMUS and Verizon Communications Inc. VZ, rejecting satellite TV broadcaster SIRIUS XM Holdings Inc.'s SIRI objection to the same.
Earlier this year, T-Mobile US had entered into an agreement to swap certain AWS-1 and PCS spectrum licenses with Verizon in various markets across the U.S. The deal was valued at $173 million. Notably, T-Mobile US is expanding its 4G LTE (long-Term Evolution) networks capitalizing on the AWS band of spectrums. Initiated in 2013, the company’s LTE network currently covers around 300 million POPs (point-of-presence).
The proposed deal covered spectrum swaps in parts of Arkansas, California, Illinois, Indiana, Iowa, Kentucky, Massachusetts, Minnesota, Mississippi, Missouri, Montana, New York, North Dakota, Ohio, Pennsylvania, South Dakota, Tennessee and Virginia.
SIRIUS XM filed an objection to this deal to the FCC in Aug 2015. The company claimed that T-Mobile US’ AWS-1 cell sites are already interfering with its receivers. SIRIUS XM held that in the event of T-Mobile US receiving additional AWS-1 spectrums in several other markets, the signal interference will only get worse.
After hearing both sides’ arguments, the FCC ruled that SIRIUS XM failed to provide adequate reasons in favor of its argument. As a result, the FCC cleared the deal without imposing any restrictive conditions. The regulator, however, retained SIRIUS XM’s right to seek justice on the alleged interference problem in a different proceeding.
T-Mobile US argued that the company is using AWS spectrums in accordance with the FCC’s directives and regulations and therefore it is the duty of the SIRIUS XM to rectify the interference problem that it is facing. SIRIUS XM is currently coordinating with T-Mobile US to fix the issue. However, the company has warned that it may resort to other options if it fails to reach an understanding with T-Mobile US.
Zacks Rank
T-Mobile US, SIRIUS XM and Verizon Communications currently carry a Zacks Rank #3 (Hold). A better-ranked stock in this industry is AT&T Inc. T with a Zacks Rank #2 (Buy).
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