Two of the nation's largest telecommunications companies are trying to persuade the Federal Communications Commission to allow the companies to jointly bid in the next airwave spectrum auction, which allows companies to lease a frequency in the broadcast spectrum. The companies, T-Mobile and Sprint, believe they have a solid case for the federal regulatory body.
T-Mobile and Sprint reason that Verizon and AT&T will likely be allotted much more of the spectrum, so it would be fair that the two companies bid together. The two telecom providers have been discussing a possible merger for the last year.
According to reports, these two wireless companies have been working on a plan to raise about $10 billion to spent at the FCC's spectrum auction, which takes place in 2015. These funds are reportedly part of a larger $45 billion finance package from SoftBank to fund Sprint's acquisition of T-Mobile. SoftBank reportedly agreed to allow T-Mobile to oversee the venture.
According to another source, the spectrum is available in the FCC Incentive Auction from spectrum no longer in use by broadcasters. That same source notes that the company may have agreed to terms for a merger deal this past month.
Rumor has it that a deal for the merger could be announced as early as this summer, but this information has not yet been confirmed. The joint venture is unlikely, sources say, but if it were to go through, the two companies would gain valuable resources against Verizon and AT&T. Both of those latter companies have quite a bit of dough to spend on spectrum and they will likely gobble up much of it the auction.
It is still unclear what might happen if the merger is blocked and whether or not the companies would still be able to bid the $10 billion at the FCC auction. According to a separate report, the spectrum they seek is low-band 600-Mhz frequencies. At those frequencies, coverage would extend to wider areas and signals are well-suited to penetrating walls.
The companies argue that the spectrum, even split between the two, would ultimately benefit consumers. One analyst interviewed by reporters, however, said that the joint bid seems less about acquiring wireless spectrum for their networks than about endorsing a merger that combines them.
According to sources, Sprint would purchase T-Mobile for around $32 million. The FCC might be preparing their ruling on the merger just in time for the coming auction.
