Verizon's 1Q15 Results: What Were Its Key Transactions? (Part 3 of 4)
Verizon’s acquisition of AWS-3 spectrum
Earlier in this series, we learned about Verizon’s (VZ) proposed sale of wireline assets in three states to Frontier Communications (FTR). We also learned about the completed wireless tower transaction between Verizon and American Tower (AMT). Now, we’ll look at a significant asset that the telecom company bought during 1Q15. Verizon bought ~$10.4 billion worth AWS-3 spectrum in the FCC (Federal Communications Commission) Auction 97 during the quarter.
As you can see in the above chart, among telecom companies, Verizon won the second highest holdings in the auctioned AWS-3 spectrum. AT&T (T) won the highest. AT&T got spectrum holdings worth ~$18.2 billion in this transaction. T-Mobile (TMUS) won ~$1.8 billion worth of spectrum holdings. Sprint (S) didn’t participate in this auction. We haven’t included Dish Network. The satellite TV provider won ~$13.3 billion, excluding discounts, worth of AWS-3 spectrum holdings through two designated entities in the FCC auction.
AWS-3 spectrum will help Verizon increase network capacity
Verizon bought the AWS-3 spectrum holdings to strengthen its existing mid-band spectrum portfolio. Spectrums in this band are particularly useful for adding capacity to the wireless network. They have capacity and coverage attributes. This spectrum acquisition should help Verizon cater to its smartphone and tablet customers’ increasing data demands.
If you want to get diversified exposure to Verizon, you can invest in the iShares Russell 1000 Growth ETF (IWF). IWF held ~1.8% in the telecom company on March 31, 2015.
However, you can get more diversified exposure to Verizon by investing in the iShares MSCI ACWI ETF (ACWI). ACWI held ~0.5% in the company at the end of March.
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