AT&T and Verizon agree to tap each other’s assets

Network carriers are notorious for slinging mud in their rivals’ direction at any opportunity. It’s a dog-eat-dog business world, after all. So, what’s the only thing that can get the two biggest rivals in the US wireless market to work together? Mutually beneficial business arrangements, of course. You see, the FCC laid down a couple ground-rules when they approved AT&T (NYSE: T)’s acquisition of Dobson Communications for a cool $2.8 billion. AT&T had to agree to forgo rights to the Cellular One brand name that was previously controlled by Dobson Communications – they’ll be selling that brand-name to Trilogy Partners. Additionally, the FCC is requiring that AT&T offload some of recently acquired Cellular One’s rural-market assets.

So, with Verizon (NYSE: VZ) Wireless’s planned acquisition of Rural Cellular Corporation for $757 million in mid-2008, AT&T and Verizon Wireless have agreed to tap each other’s, ahem, assets – by which we mean the two companies will be selling each other a portion of their recently acquired assets (what did you think we meant?).

Verizon will be selling a portion of Rural Cellular’s licenses and network infrastructure (and the subscribers that come with those assets) to rival AT&T. On the flip-side, AT&T will be selling about 10Mhz of formerly Dobson-owned frequency spectrum to Verizon Wireless. Interestingly, AT&T will also be giving Verizon Wireless some additional cash – in the consumer world, we call this a “rebate.” It’s not clear just how big a rebate Verizon Wireless will get from their 10Mhz spectrum purchase – but it makes sense, seeing as how AT&T will net about 133,000 subscribers from this swap, while Verizon Wireless will only net approximately 100,000.

Isn’t it nice to see network operators get in bed together? Just ignore the fact that AT&T basically had to pay Verizon Wireless to play their little game.

[Via: EETimes]