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AT&T Gets FCC Nod for Verizon Airwaves

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Leading wireless provider, AT&T Inc. (T) has reportedly won the Federal Communications Commission (:FCC) approval for buying $1.9 billion worth airwaves from Verizon Communications Inc. (VZ). The deal is expected to bolster the company’s network capacity in 18 states across the U.S. Reportedly, as a part of this transaction, Verizon is also acquiring airwaves in cities like Los Angeles and Phoenix from AT&T.

Apart from the deal with Verizon,  AT&T also plans to acquire spectrum from Atlantic Tele-Network Inc. (ATNI) for $780 million. Further, the company is proposed to take over the largest prepaid wireless operator in the U.S. – Leap Wireless International (LEAP) – for $1.2 billion.

This acquisition will also give AT&T control over Leap’s spectrum in the PCS and AWS bands covering 137 million people, thereby enhancing the spectrum base of the former. AT&T plans to use the unutilized spectrum of Leap to expand its 4G LTE deployment, rendering more capacity, better network connectivity and increased mobile Internet usage.

AT&T’s LTE network serves as the benchmark of mobile technology and the life-blood for operators across the world. The company is running ahead of schedule to deploy 4G Long-Term Evolution (:LTE) services. The company currently covers about 225 million users with the services and expects to connect 270 million people by 2013 end.

Further, AT&T, through its Project Velocity Internet Protocol (IP), will invest $14 billion in the coming three years to considerably expand the wireless (investment of $8 billion) and wireline (investment of $6 billion) IP broadband networks.

The company targets to extend the wireline IP network to nearly 57 million customer locations (including both customers and small businesses) – covering 75% of AT&T’s wireline service area – by the end of 2015. This project underlines the company’s efforts to meet the growing demand for high-speed Internet. We believe that this investment program will provide AT&T with a high-potential growth platform, leading to higher revenues and improved earnings per share.

AT&T retains a Zacks Rank #3 (Hold).

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