T-Mobile Plans to Raise $1B to Attain 700MHz

T-Mobile seeks to raise $1 billion in bonds to fund the acquisition of 700 MHz and above spectrum and other airwaves. T-Mobile is the nation’s third-largest carrier with reasonable cell phone service and has spent more than $1 billion in recent months to buy 700MHz licenses from Cellular South, Cavalier and others in order to cover major areas in the South.

"In January 2016, T-Mobile acquired spectrum licenses covering nearly 20 million people in seven major metropolitan markets for approximately $0.6 billion in cash," T-Mobile said in an SEC filing earlier this year. "Additionally, in January and February 2016, T-Mobile entered into agreements with multiple third parties for the exchange of certain spectrum licenses and the acquisition of 700 MHz-a block spectrum licenses covering approximately 48 million people, for approximately $0.7 billion in cash."

T-Mobile has been smart enough to buy 700 MHz spectrum to spread out its coverage in rural and urban areas to make its network competitive with other major carriers like Verizon and AT&T. 700 MHz is considered as good for covering large geographical areas because of propagation characteristics. Other U.S. carriers will suffer as soon as they face this competition and will perhaps seek to provide cheap cell phone services to compensate this T-Mobile revolution. T-Mobile has consistently referred to the spectrum as its “Extended Range” LTE service. Although T-Mobile appears to be the primary owner of 700 MHz licenses in the U.S., as depicted by the map from Allnet Insights & Analytics, showing the current status of A Block ownership throughout the country.

Recently, T-Mobile has planned to leverage its wide network by growing its retail presence in the suburban and rural areas where it initially wasn’t present. "We now cover 305 million people in the U.S. with our 4G LTE footprint, and we think right now we have the opportunity to expand our distribution into another 30 to 40 million POPs here in the U.S. where we have zero penetration. The ecosystem's there," T-Mobile CFO Braxton Carter confirmed at an investor conference earlier this month, clarifying every new handset the carrier sells supports 700 MHZ.

T-Mobile’s new bond is likely to be issued in the form of senior notes that is relatively secure and must be repaid in case of bankruptcy. Furthermore, they will be issued in a registered public offering and come due in 2024.