T-Mobile US Inc (TMUS.N) said on Monday it would buy spectrum licenses from Verizon Wireless to improve its high-speed wireless services in a deal worth $3.3 billion.
T-Mobile, majority owned by Deutsche Telekom (DTEGn.DE), said the deal includes $2.365 billion in cash and a transfer of spectrum worth $950 million.
It had been raising money to buy more airwaves as it beefs up its network to catch up with rival services.
T-Mobile, the No. 4 U.S. mobile provider, said the licenses cover more than 150 million people in areas such as New York, Atlanta and Los Angeles. It expects to roll out services using the spectrum as early as the fourth quarter of 2014.
It said that the transaction, which requires regulatory approval, is expected to close around the middle of 2014.
T-Mobile had raised $1.8 billion through a sale of its common stock in November and sold about $2 billion in bonds to fund future spectrum purchases.
Wells Fargo analyst Jennifer Fritzsche said the spectrum would boost T-Mobiles network capacity and coverage, but estimated that it could cost another $1 billion to add spectrum to its network.
T-Mobile also said the companies will realign spectrum blocks in markets such as northern California and Atlanta.
Verizon Wireless said last year it would consider selling unused A Block airwaves in the 700 megahertz frequency band that T-Mobile has now agreed to buy. It had tried to sell the spectrum in 2012.
TAP Advisors was the financial adviser for T-Mobile.
T-Mobile shares were up 0.7 percent at $32.50 in premarket trading. Verizon shares rose 0.5 percent to $48.65.