T-Mobile Selling to Grain 800 MHz Licenses as Carrier Refocuses on 600 MHz
Grain Management will buy all of T-Mobile's 800 MHz spectrum in exchange for cash and Grain's 600 MHz spectrum portfolio, the companies announced Thursday night. Grain confirmed it plans to make the spectrum available “to U.S. utilities to support mission-critical communications, improve grid resilience, and enhance emergency response capabilities.”
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Earlier, T-Mobile and Grain laid out some details in a filing at the FCC (see 2503190043). T-Mobile said it hopes to close the sale by the end of April. The company was required to sell the 800 MHz spectrum as part of its purchase of Sprint, giving the first option to Dish Network, which Dish didn’t exercise.
T-Mobile CFO Peter Osvaldik said last year (see 2403060056) that if the Dish sale fell through, T-Mobile would auction the 800 MHz licenses “with a floor price of just under $3.6 billion.” Company officials confirmed last April that they planned to sell the 800 MHz licenses through a private auction.
Meanwhile, T-Mobile has been buying 600 MHz licenses, including from Columbia Capital and Comcast. The company said in a January filing at the SEC that it had an average of 41 MHz nationwide in the 600 MHz band, compared with 10 MHz in the 700 MHz band and 14 MHz in the 800 MHz band.
New Street’s Philip Burnett said the transaction likely values the 800 MHz spectrum as “equal, or at least very close,” to its original $3.59 billion price tag. T-Mobile will likely use the proceeds to repurchase stock, though it could use some of the money for other acquisitions, Burnett said.
"As the energy sector undergoes rapid modernization, utilities require reliable and secure communication networks to support grid operations and disaster response," Grain CEO David Grain said. "This spectrum investment reinforces our commitment to digital infrastructure that can enable critical industries to operate more efficiently and securely."
Grain Management highlighted the advantages of the 800 MHz spectrum. It's “known for its superior propagation properties that enable extensive coverage, reliability, and in-building penetration, making it ideally suited for critical utility applications,” the company said. The spectrum “offers utilities a dedicated option to enhance resilience and control over their existing communications infrastructure.” Grain is working with energy and infrastructure experts from Black & Veatch on the outreach to utilities.
The transaction is “a great value for both parties,” said Dirk Mosa, T-Mobile senior vice president-spectrum, partnerships and acquisitions. “This deal also gives us a great opportunity to deploy Grain’s 600 MHz portfolio of spectrum on T-Mobile’s network, which is already creating better customer experiences in several markets.”
Recon Analytics’ Roger Entner said regulatory approval of the deal is likely just “a formality.”
F9 Finance’s Michael Dion warned last week that financial markets had overvalued T-Mobile and downgraded the stock to sell. “There is material downside risk as the telecom industry is sitting on the edge of a price war,” he said in a note to investors. “While there is upside potential as T-Mobile is the best positioned for the current economic situation, the combination of overvaluation and pricing risk cannot be overlooked.”