Skip to main content

NEW YORK (TheStreet) -- Verizon (VZ) - Get Verizon Communications Inc. Report is reportedly close to reaching an agreement with T-Mobile (TMUS) - Get T-Mobile US, Inc. Report to sell unused rural spectrum for cash and urban spectrum, according to Bloomberg.

The alleged deal may be announced next week and would see Verizon sell off some of its 700 MHz spectrum to T-Mobile. The spectrum would help T-Mobile reach a larger customer base, as it will cover an area that reaches about 150 million people. The spectrum should help T-Mobile greatly expand its LTE network.

In exchange for the spectrum Verizon may ask for about $3 billion. The carrier paid $2.6 billion for the A block 700 MHz spectrum at a government auction back in 2008.

Verizon may also receive so-called AWS spectrum from T-Mobile that it can use to bolster its LTE network in large cities. The carrier has recently invested heavily in improving its network in cities such as New York to help alleviate network congestion issues.

Any deal between the two carriers is subject to Federal Communications Commission approval.

TheStreet Recommends

This reported deal comes shortly after the FCC delayed an auction of spectrum in the 600 MHz range that T-Mobile and Sprint (S) - Get SentinelOne, Inc. Class A Report

Neither Verizon nor T-Mobile were available for comment.

TheStreet Ratings team rates VERIZON COMMUNICATIONS INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate VERIZON COMMUNICATIONS INC (VZ) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, good cash flow from operations, expanding profit margins and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • VZ's revenue growth has slightly outpaced the industry average of 3.4%. Since the same quarter one year prior, revenues slightly increased by 4.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Telecommunication Services industry. The net income increased by 40.1% when compared to the same quarter one year prior, rising from $1,593.00 million to $2,232.00 million.
  • Net operating cash flow has increased to $11,239.00 million or 18.46% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -7.69%.
  • The gross profit margin for VERIZON COMMUNICATIONS INC is rather high; currently it is at 63.80%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 7.37% trails the industry average.
  • VERIZON COMMUNICATIONS INC has improved earnings per share by 39.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, VERIZON COMMUNICATIONS INC reported lower earnings of $0.31 versus $0.86 in the prior year. This year, the market expects an improvement in earnings ($2.82 versus $0.31).
  • You can view the full analysis from the report here: VZ Ratings Report