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T-Mobile US closes on Ntelos spectrum deal

T-Mobile US bolsters 1.9 GHz license portfolio, as Ntelos moves to close eastern markets

T-Mobile US closed on its $56 million acquisition of 1.9 GHz spectrum licenses covering around 55 million potential customers from regional operator Ntelos.

The deal, which was initially announced last December, begins Ntelos’ plans to exit some of its eastern Virginia market and focus its operating efforts on markets in western Virginia and West Virginia.

The spectrum sale included licenses covering Richmond, Hampton Road and Norfolk, Va., and bolsters T-Mobile US’ spectrum footprint in support of LTE services. T-Mobile US is currently using its 1.9 GHz spectrum to support its 2G and 3G services, but has begun to refarm those licenses to further support LTE services that currently rely on its 1.7/2.1 GHz spectrum holdings.

For Ntelos, the deal solidifies its new focus on its western footprint that is also part of its relationship with Sprint as well as plans to expand LTE coverage. Ntelos announced earlier this year an agreement to sell up to 103 of its towers to an affiliate of private-equity firm Grain Management for approximately $41 million.

“Closing the spectrum sale on schedule is another example of how we are executing on our strategic plan to enhance value for shareholders,” explained Rod Dir, CEO at Ntelos. “The proceeds from the spectrum sale and the towers sale … will provide us with additional financial flexibility as we expand 4G LTE coverage in our western markets and invest in areas where we are the most competitive.”

Ntelos has seen its competitive position threatened over the past year, as many of its larger rivals have expanded coverage into rural markets. Ntelos signaled a change of direction last summer when long-time CEO James Hyde left the company just as the carrier posted mixed second-quarter financial results. Hyde had overseen dramatic moves by the company, including its decision in late 2010 to split up its wireline and wireless divisions, as well as signing the network deal with long-time network partner Sprint, which runs through 2022.

Ntelos will lease back a portion of the spectrum sold to T-Mobile US in a move to continue serving customers in its eastern footprint through November, at which point the carrier said it will shut down those operations. The decommissioning of services will include the closing of retail operations and transfer of approximately 180,000 current subscribers in those markets to “another carrier.”

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