March 15, 2005

Verizon Wireless is to acquire certain wireless licenses and assets for $102.5 million from Leap Wireless International Inc.

The two companies also signed an agreement allowing Leap customers to roam on Verizon Wireless' network.

The transaction, subject to federal regulatory approval, is expected to close in several months.

Verizon Wireless is acquiring 23 wireless licenses covering a population of 8 million people in 20 markets in Michigan, Wisconsin, Arkansas, Mississippi, Alabama and upstate New York.

Several licenses are in markets where Verizon Wireless already has licenses, and will be used to expand capacity to meet growing demand for voice and data services.

These markets include Birmingham and Tuscaloosa, Ala.; Little Rock, Ark.; Jackson, Miss.; Grand Rapids, Flint, Kalamazoo, Muskegon and Mt. Pleasant, Mich.; and Plattsburgh and Watertown, N.Y. The two carriers will also trade mobile-phone licenses in Buffalo, N.Y.

Under the agreement, Leap Wireless will transfer its operations and approximately 25,000 customers in Battle Creek, Jackson, Kalamazoo and Flint, Mich., to Verizon Wireless.

The deal follows Verizon's recent strategy of acquiring licenses to deal with its expanding customer base.

Those deals have included $4 billion in payments for most of NextWave Telecom Inc.'s spectrum holdings; $2 billion for Price Communications Corp.'s network and spectrum; $750 million for 50 spectrum licenses from Northcoast Communications L.L.C.; $414 million for Qwest Communications International Inc.'s network and spectrum; $700 million in bids during the recent Federal Communications Commission Auction 58; and several smaller deals.

"Verizon has done a good job in picking up pieces of spectrum where it could and has managed to keep ahead of its spectrum needs," said Tole Hart, senior analyst for mobile communications at Gart.

"[Verizon] may still be a little short in a few larger markets, but I think in general it's in pretty good shape."

Source: RCR News