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T-Mobile to Issue $3B of Notes to Pay for Spectrum Licenses

T-Mobile plans to offer $3 billion of notes, with $2 billion of the proceeds earmarked for its acquisition of spectrum licenses it gained in an FCC auction.
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T-Mobile  (TMUS)  said Tuesday that it planned to offer as much as $3 billion of senior notes to help pay for the $9.3 billion of spectrum it won in a Federal Communications Commission auction last month.

“T-Mobile USA intends to use $2 billion of the net proceeds from the offering of the notes to acquire spectrum licenses pursuant to the FCC’s C-Band spectrum Auction 107," the Bellevue, Wash, company said in a statement.

The rest will go to redeem its 6.5% senior notes due 2026 and to refinance current debt, it said. 

T-Mobile’s debt financing apparently isn’t bothering investors. Its stock recently traded at $126.50, up 0.7%. It has climbed 8% in the past six months, half the percentage rise in the S&P 500.

T-Mobile, the No. 3 wireless carrier, joins No. 2 AT&T  (T)  and No. 1 Verizon Communications  (VZ)  in taking on debt to finance their spectrum purchases. Verizon successfully bid for $45.4 billion last month and AT&T for $23.4 billion.

In January, T-Mobile issued $2 billion of bonds to pay for spectrum. In October, it announced it’s launching three TV services.

Last month, AT&T reached a deal to spin out 30% of its DirecTV unit by forming a new company with the San Francisco private-equity firm TPG Capital, which will pay $1.8 billion for its stake in the satellite-TV video business.

Also last month, Warren Buffett’s Berkshire Hathaway said that it had taken an $8.6 billion stake in Verizon last year.

Verizon and AT&T recently traded little changed, at $55.70 and $29.94 respectively.