Leap Wireless International yesterday announced more specifics of its previously reported spectrum swap with Verizon Wireless. Leap released a statement yesterday that confirms the carrier has entered definitive agreements to acquire 12 MHz of 700 MHz A block spectrum in Chicago from Verizon Wireless for $204 million and to sell Verizon Wireless excess PCS and AWS spectrum in various markets across the U.S for $188 million.
The additional spectrum in the Chicago area will supplement the 10 MHz of spectrum Leap currently operates in the city. Both companies anticipate that both transactions will close simultaneously, subject to regulatory approvals.
In addition, Leap's non-controlled, majority-owned venture, Savary Island Wireless, also has entered into a definitive agreement with Verizon Wireless to sell AWS spectrum in various markets for $172 million.
Savary Island has agreed to use substantially all of the proceeds from this sale to prepay its indebtedness to Cricket at the closing of the transaction. In connection with the closing, Cricket will repay the balance of a note which is secured by a portion of the Savary Island spectrum being sold to Verizon Wireless.
"Together, these transactions will allow us to strengthen our spectrum position in our Chicago market and receive net cash proceeds of more than $100 million, after repayment of indebtedness and estimated transaction fees," said Doug Hutcheson, Leap's president and CEO, in a statement. "We plan to use the net cash proceeds to support our ongoing deployment of LTE network technology. As we have previously announced, we plan to cover approximately two-thirds of our current network footprint with LTE technology over the next two to three years."