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Verizon sells spectrum to AT&T for $1.9B

As part of the deal, Verizon will get some spectrum back from AT&T. Verizon is also selling off another smaller swath of spectrum to a private equity firm.

The carriers all say they need more spectrum to carry the increasing traffic from smartphones such as the iPhone.

Verizon Wireless is unloading a swath of spectrum on AT&T for $1.9 billion.

The spectrum, part of Verizon's 700MHz B block, which it isn't using itself, will likely be used by AT&T to further augment its 4G LTE deployment as it looks to strengthen and broaden its coverage. As part of the deal announced today, AT&T will give up a few wireless licenses covering select western markets.

The deal is part of Verizon's promise that it would make available its 700MHz B block spectrum. That promise was made to convince regulators to approve a separate deal to acquire a larger swath of spectrum from cable providers.

AT&T, meanwhile, has gone on a shopping spree to augment its own spectrum position, scooping up small assets around the country. The carrier on Tuesday said it would buy the U.S. retail operations of Atlantic Tele-Network for $780 million, largely for its spectrum assets.

With wireless use growing exponentially, the carriers have been busy shoring up their spectrum positions, which give them the capacity to continue delivering services without disruption or bandwidth traffic jams. T-Mobile USA and MetroPCS, for instance, are merging in an effort to combine their spectrum for better service for both of their customer bases.

AT&T CEO Randall Stephenson said on a conference call yesterday that he feels "good" about the company's spectrum position.

The deal covers 39 licenses and multiple markets. In exchange, Verizon will get AWS spectrum covering markets such as Los Angeles, Fresno, Calif., Phoenix, and Portland.

Separately, Verizon agreed to sell a small part of its 700MHz B block spectrum for $189 million to Grain Management, a private equity firm based in Sarasota, Fla., that invests in telecommunications companies. Verizon will also pay Grain Management for the use of AWS spectrum that Grain acquired from AT&T.