Verizon has been facing medium-term capacity difficulties after the collapse of the US spectrum auction last year. Buying several local operators from Dobson should help to compensate for this. The more acquisitions Verizon makes, the less likely it will be to run out of bandwidth before any new auctions take place.
Verizon Wireless has purchased various mobile assets from Dobson Communications for $465 million.
Verizon Wireless, the US’ largest mobile operator by subscriber numbers, has bought $465 million of assets from Dobson Communications. These include mobile networks in California, Georgia, Ohio and Tennessee, which have a total of 950,000 customers. The operations, which currently trade as Cellular One and Alex Wireless, will be rebranded as Verizon Wireless starting immediately.
The mobile operator, which is jointly owned by Verizon Communications and Vodafone, is also buying another network from Dobson, in a transaction that should complete later this month. Verizon will buy 75% of Gila River Cellular General Partnership, in Arizona. This currently trades as Cellular One, and will be also rebranded under Verizon’s name.
This expansion is a wise move on Verizon’s part for two reasons. The first is that roaming deals with other operators can be expensive, and these are big roaming markets for Verizon. The four market areas that the operator has acquired from Dobson are adjacent to ones where it already operates. Verizon previously had to pay expensive roaming charges when customers left its coverage areas.
On top of this, following the collapse of last year’s US spectrum auction, Verizon looked like it was going to encounter problems with capacity in some markets. Verizon only has enough capacity to keep growing for 18 months to two years without running out of space. Adding the Dobson operators and their bandwidth to its empire should partially compensate for such difficulties.
The company has made the right decision: Verizon needs to keep snapping up extra spectrum when the opportunity arises, or at least until the courts reach a decision over the spectrum dispute.