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Tag Archives: Verizon Wireless

Bond Deal Keeps Capital Flowing at Verizon After Vodafone Acquisition

It has been a busy month at Verizon Communications, which acquired Vodafone’s 45 percent position in Verizon Wireless for $130 billion on Sept. 2.  A little more than a week later, the carrier rolled out a bond deal that netted $49 billion.

The Vodafone deal, which doubled Verizon’s debt load, might have sucked capital away areas such as infrastructure development if it weren’t for carrier’s blockbuster bond sale, Thomas Engel, principal, Milestone Media Partners, told AGL Bulletin.

“I would think that the amount of money Verizon is paying to Vodafone would cramp their capital budget and possibly slow their LTE build out, thereby slowing some revenue growth for the tower industry,” Engel said. “On the other hand, if the $49 billion bond sale goes through at today’s interest rates, Verizon will probably have sufficient funds to do both.”

Verizon will pay Vodafone $58.9 billion in cash, which it will fund with a $61 billion bridge credit agreement with J.P. Morgan Chase Bank, Morgan Stanley Senior Funding, Bank of America and Barclays.

The bond deal, which was the largest corporate debt sale in history dwarfing Apples’ $17 billion offering last spring, goes a long way to help pay some of that money back.

“This issue, combined with giving Vodafone holders $60 billion of newly issued Verizon shares, and various other transactions, gets the whole deal paid for before long-term interest rates rise even more…” wrote Allan Sloan in CNN Money.

As a wholly owned entity, Verizon Wireless should be better equipped to take advantage of the changing competitive dynamics in the market, according to Lowell McAdam, Verizon chairman and CEO.

“The capabilities to wirelessly stream video and broadband in 4G LTE complement our other assets in fiber, global IP and cloud. These assets position us for the rapidly increasing customer demand for video, machine to machine and big data. We are confident of further growth in wireless, and our business in its entirety,” he said.

Data Use Drives Increase in VZW CapEx

Even though its LTE build-out is complete, Verizon is finding plenty of reasons to increase spending on its wireless infrastructure, officials said on the carrier’s second quarter earnings call. Additionally, deployment has begun on the nationwide 20 megahertz band of Advanced Wireless System spectrum, which it purchased in the latter part of 2012.

“We have essentially completed our initial LTE build-out by matching our 3G footprint. Throughout the rest of the year, we will continue to invest by adding capacity to our existing coverage as we begin to deploy AWS spectrum throughout the network,” Fran Shammo, Verizon Executive VP and CFO, told the attendees of the conference call.

Work on increasing capacity is now taking the place of extending coverage to accommodate LTE user growth.

“Strong connections growth driven by 4G LTE and our Share Everything Plan has resulted in higher demand forecasts and the need for increased capital investment,” Shammo said.

Verizon spent $2.3 billion on wireless capital spending in the second quarter, and through the first half of this year, wireless CapEx totaled $4.3 billion, 8.6 percent higher than last year. Additionally, the carrier is increasing its full-year capital spending outlook from $16.2 billion to between $16.4 billion and $16.6 billion.

Shammo defended the spending increase as “not a huge step up in our capital spend” but an important acceleration in the LTE deployment.

In the first half of 2013, Verizon added 6.2 million more LTE users compared with the first half of last year, and LTE makes up 33 percent of users. Currently, 59 percent of the data traffic now runs on the 4G network.

“We have always said that as customers move into the [Share Everything Plan] and they realize the viability and speeds and the consistency of this 4G network, it’s going to drive them to higher usage. If you look at where video is going in the future, obviously that’s going to continue the proliferation of the usage on this network,” Shammo said.

Looking out two years, based on usage patterns and LTE device sales, Verizon must accelerate capacity more than it previously expected, Shammo said. Shammo defended the spending increase as “not a huge step up in our capital spend” but an important acceleration in the LTE deployment.

“So the incremental investment will more than pay for itself on topline growth from what I see, and again this is really a shift in our capital discipline between wireline and wireless,” he said. “We are going to maintain our lead on the most reliable, consistent 4G LTE network. So that’s what’s driving the increase for CapEx.”

Loss of AT&T Tower Use Cuts Off Verizon Users

Verizon Wireless service was interrupted on June 24, when several rural communities in Montana lost the ability to roam on to local AT&T towers. The towns included Lincoln, Virginia City, Lima, Broadview and the Absarokee-Fishtail area, according to a state Department of Justice news release.

Late in June, users began to contact the state Office of Consumer Protection and the Public Service Commission to complain about the disruption, said Anastasia Burton, deputy communications director with the Montana Department of Justice.

The service disruption began after a three-year contract allowing calls of Verizon subscribers to roam using AT&T cell towers in-state ended on June 22, according to a news release from Burton. The contract was part of a deal brokered when AT&T bought Alltel from Verizon in Montana in 2010.

Verizon has been attempting to address projected coverage issue in the last three years, according to a Verizon spokesman, and is currently acting to fill in the shortfalls.

On July 2, the carrier responded by deploying cell towers on wheels in rural locations around Montana, according to TV station KAJ18, with additional permanent towers slated to come online in mid-July and early August, accord to a Verizon spokesman.

Ironically, Verizon Wireless sent out a press release in March of this year touting an expansion of its Montana LTE service to include the Great Falls metropolitan area, as well as along I-15 to include the Great Falls International Airport and along Hwy 87 to include Black Eagle. Verizon Wireless had previously launched 4G LTE service in the include Billings, Bozeman, Butte, Helena, Kalispell, Missoula and other locations.

Verizon, AT&T Roll Out Small Cells

Ballyhooed by some, feared by others (DAS providers) and a source of confusion for most, small cells continue to move from concept to reality, allowing carriers to fill in dead spots, beef up congested areas and provide coverage for enterprises.

During the second half of 2013, Verizon Wireless will begin deploying small cells in its LTE network, which totals 497 markets, using access points from network vendors Alcatel-Lucent and Ericsson.

“As part of an overall 4G LTE network, [small cells] help deliver the quality, reliability, footprint and capacity to accommodate new applications, the burgeoning use of video and the popularity of smartphones and tablets with larger screens and sharper images,” according to a Verizon Wireless blog.

More than 200 LTE small cells will be deployed in the next six months to enhance localized capacity and coverage in business districts and shopping malls, wherever there is concentrated traffic. Because they are only the size of a mini refrigerator, small cells can be deployed on lampposts, utility poles and building walls.

“Like macro cells, they must be connected to the core wireless network and may pose operational challenges ranging from site acquisition and leasing to regulation and permitting by local authorities. While not a panacea, they are a valuable addition to a 4G LTE network, part of a balanced network strategy,” according to a Verizon press release.

Ericsson will be providing its micro remote radio unit small cells (RRUS) for Verizon’s LTE network, which can be easily integrated into the overall network because it works with any baseband unit as part of the RBS 6000 product line. It is the first commercial deployment of Ericsson’s micro RRUS.

Later this year, Ericsson will also provide Verizon with the micro RBS 6501, which is a multi-standard base station supporting 3GPP 37.104 and provides local-area and medium-range coverage in a heterogeneous network environment. The micro RBS delivers high-capacity coverage in a small form factor.

Small Cells Already Seeing Action for AT&T

AT&T has been rolling out HSPA+ small cells since the beginning of this year as part of its Velocity IP program and is planning to deploy a multi-technology (UMTS, LTE and Wi-Fi) version of the small cell in 2014. Jim Parker, AT&T spokesman, told DAS Bulletin that small cells would complement DAS deployments.

“It is interesting to see where small cells play,” Parker said. “In vertical markets where they demand neutral host access points, such as airports, shopping centers, major hotels, that is where DAS still has a play. This is not the death knell for DAS.”

Small cells will be deployed in distinct verticals where there is an unmet need and DAS is not a cost-effective solution, such as the enterprise, where it is easy to install the access points above ceilings and to use the company’s backbone to backhaul the signal, Parker said.

“We are really going after the enterprise market and other public venues, such as smaller hotels,” he said.

AT&T is deploying small cells outdoors where they have a need for additional capacity. To gain real time on where the network is suffering from congestion, the carrier uses feedback directly from its phones, which record the location of a dropped or blocked call and then transmit it back to the carrier.

“I can pull up a map of the United States on a computer that shows all the cell towers and, in real time, check to see which towers are under a heavy load,” he said. “Using these diagnostics, we are able to develop a strategy for small cell deployment.” 

Formula One Comes to Texas and DAS is there to greet it

The first U.S. track built especially for Formula One racing, the Circuit of the Americas (COTA), opened its doors for business on Nov. 18 in Austin, Texas, with a brand new DAS deployed by ExteNet Systems. More than 117,000 fans had access to the DAS to communicate using their smart phones during the race where Vodafone McLaren Mercedes’ Lewis Hamilton won his fourth Grand Prix of the season.

In 2013, COTA has scheduled multiple events expected to draw more than 1.2 million attendees. For example, it will be the site of the Formula One U.S. Grand Prix with an attendance of 260,000, a Grand-Am with an attendance of 130,000, a three-day MotoGP event with 210,000 people and four major concerts totaling 80,000 attendees.

“It is a high profile venue. It is the first time Formula One has been back in the United States in five years,” Ross Manire, ExteNet president and CEO told DAS Bulletin. “It is a high volume venue, given the nature of the events they will run and the capacity of the facility. Given the number of fans that will attend these events, capacity was clearly a driver behind this network, which can support 24 radio sectors. It is also flexible enough to accommodate all the different types of other events at this venue.”

ExteNet began talking with Circuit of the Americas about providing a DAS, just as COTA had completed design of the facility, almost a year before it was built. ExteNet bid on and won the contract to deploy a DAS network. Wi-Fi was not included in COTA’s communications network plans, according to Manire, but Wi-Fi is a part of ExteNet’s offerings.

“The DAS network is integrated with the existing [macrocellular] infrastructure at the track,” Manire said. “We tried to do everything we could to integrate the distributed network into the context of the overall esthetics of the track.”

Circuit of the Americas is a 3.41 mile, 20-turn racing track with more than 133 feet of elevation change, stretching across 900 total acres. The track also includes a 20,000 seat amphitheater for concerts and festivals and a 40,000-square-foot conference center. More than a dozen two-story executive meeting suites include 3,600 square feet of space, elevators and kitchens.

“Fundamentally, the DAS architecture used at COTA is comparable to what ExteNet deploys in a Major League Baseball stadium or an NFL stadium,” Manire said. “There was more infrastructure built [at COTA]. This one was a bit more complex because of the geography that had to be covered, the track, the stands and the parking facilities.”

ExteNet’s distributed network is capable of supporting up to five wireless carriers and their technologies, including GSM, UMTS, CDMA, EVDO and LTE.

“We can accommodate all the different carriers and all the wireless technologies they may want to run,” Manire said. “In any system we build we are trying to attain double digit ROI when we get three carriers on the network and so our pricing is set accordingly. When we start off with that anchor tenant we are making the financial bet that we will get the second and third, hopefully a fourth tenant.”

ExteNet faced a compressed time table for getting carriers on the system. The go ahead for the DAS was not given until in August 2012 for the system that had to be operational in mid-November. ExteNet was only able to get Verizon Wireless to commit before this fall’s inaugural Formula One race. Manire said other carriers are expected to join in providing service on the DAS.