Verizon Wireless plans to acquire wireless spectrum from SpectrumCo LLC for $3.6 billion in an exclusive agreement, the companies jointly announced Friday.
SpectrumCo is a joint venture between Comcast, Time Warner Cable and Bright House. Comcast will receive approximately $2.3 billion from the sale, Time Warner will receive approximately $1.1 billion and Bright House will receive approximately $189 million.
The agreement will allow companies in the joint venture to provide wireless service on Verizon's network, while Verizon can sell cable company services in its stores. Under the exclusive agreement between SpectrumCo and Verizon, SpectrumCo will stop selling Clearwire services in approximately six months, Time Warner Cable spokesman Alexander Dudley told International Business Times.
Dudley didn't have a specific date for when Clearwire will be dropped, but he said those currently using Clearwire will still receive service even after the deal is closed.
Americans deserve excellence from a wireless service provider, and innovative wireless companies plan ahead in order to deliver on that expectation, Dan Mead, President and CEO of Verizon Wireless, said in a statement. ...American businesses and consumers can have the confidence that the best wireless network has the foundational resources to deliver on that promise.
We're excited about the partnership with Verizon Wireless and the future innovations we will bring to customers, Neil Smit, President of Comcast Cable, said in the statement.
Wireless companies are looking to acquire more spectrum as consumers move toward using smartphones with data plans. For instance, rival AT&T is looking to gain spectrum from T-Mobile USA through its $39 billion merger proposal. But as AT&T and T-Mobile have seen prospects of merger approval diminish, AT&T may have to sell off some spectrum space in order to keep the deal alive.
Verizon may have taken advantage of the opportunity to buy this wireless spectrum given AT&T probably couldn't bid on the deal, Piper Jaffray analyst Chris Larsen told IBTimes. But given the need to provide customers with better service, Larsen believes that Verizon would have made a deal similar to this regardless of what AT&T was looking to acquire.
Spectrum is the lifeblood of wireless service, Larsen said.
The deal must be approved by the Federal Communications Commission.
Shares of Verizon are down 0.13 percent to $37.72 at late morning trading.