AT&T Inc. agreed to pay $2.5 billion for spectrum licenses that will allow it to expand wireless services or add broadcast video in much of its coverage area, the company announced Tuesday.
The deal to acquire the licenses from Aloha Partners LP, the nation's largest owner of 700 MHz frequency, will give AT&T 12 megahertz of spectrum covering 196 million people in 281 markets. It'll boost AT&T's presence in most of the top 100 markets in the United States.
One analyst praised the deal.
Patrick Comack, a Zachary Research Investment analyst, said AT&T probably will buy up as much of the spectrum as it can at good prices. The deal with Aloha is "a steal," he said.
"It's an absolutely incredible purchase," said Comack. "They really leapfrogged everyone else."
The deal allows AT&T to begin using the 700 MHz frequency right away, Comack said.
Aloha Partners LP holds licenses for UHF channels 54 and 59.
"Customer demand for mobile services, including voice, data and video, is continually increasing,” said Forrest Miller, group president-corporate strategy and development. “Aloha's spectrum will enable AT&T to efficiently meet this growing demand and help our customers stay connected to their worlds."
The nation's largest wireless carrier could acquire still more of the spectrum in January when the Federal Communications Commission is scheduled to auction a large chunk used by analog television.
In 2009, when broadcasters must switch completely to digital television, their spectrum will be free for use by wireless providers and Wi-Fi networks.
With the spectrum AT&T is acquiring from Aloha, the company could either expand its existing wireless phone and data services or add broadcast television content that would be delivered to mobile phones.
Company spokesman Michael Coe said the company has not decided what it will do with the new spectrum. Some of it will be available immediately after the deal closes in six to nine months, the rest in 2009, he said.
AT&T already has begun exploring the delivery of broadcast video over wireless devices. Earlier this year, it announced a partnership with MediaFLO, a Qualcomm Inc. subsidiary, to roll out broadcast content. No date or details for that offering have been announced.
Providence, Rhode Island-based Aloha, was founded by Charles Townsend and Amos Hostetter, who each made fortunes in the wireless and cable business in the 1990s. Aloha bought most of the 700 MHz spectrum it holds during auctions in 2001 and 2003, and it acquired several small companies that owned licenses.
Aloh has been experimenting with high-speed wireless broadband Internet services as well as mobile TV and music service.
Services delivered over 700 MHz have longer range. Signals can also penetrate buildings and foliage.
In January the Federal Communications Commission will auction off a variety of spectrum that covers channels 52, 53, 56, 57, 58, 63, 64, 65, 67 and 68 as part of federally mandated moves of TV broadcasting to digital rather than analog signals.
Since Aloha launched early trials of mobile broadcasting in 2005, interest in the spectrum has been heated as numerous companies expressed interest in the upcoming auction, which could raise as much as $15 billion.
Apple Inc. has declined to comment on speculation, which some analysts dismissed, that it will bid.