CenturyLink (NYSE: CTL) has decided that it needs to have wireless as part of its consumer services arsenal, but instead of building out its own offering it's going to resell Verizon Wireless' (NYSE: VZ) already established wireless network services.
CenturyLink, which is close to wrapping up its acquisition of Qwest (NYSE: Q), another provider that also resells Verizon Wireless services, plans to officially launch the wireless service sometime this spring.
Through its agreement with Verizon, CenturyLink will offer its customers Verizon Wireless' full line-up of mobile phones and devices, including tablet computers, netbooks and of course its recent launch of the Apple (Nasdaq: AAPL) iPhone. Consumers will also be able to take advantage of Verizon Wireless' 4G LTE network that's currently available in 38 major metropolitan areas and more than 60 airports, and will be expanded to an additional 140 markets by the end of 2011.
Making a wireless play makes sense for CenturyLink as a way to facilitate greater customer loyalty by creating a quadruple play bundle offerings for a growing customer base that's ditching their traditional landline PTSN service. Unlike other large ILECs AT&T and Verizon, CenturyLink does not have a wireless network from which to offer wireless services and the Verizon Wireless deal could fill that gap.
While CenturyLink does own its own 700 MHz spectrum, which it initially intended on using to provide wireless-based broadband services as a complementary service to its wireline-based DSL service, the service provider recently revealed during the Citi Entertainment, Media & Telecommunications Conference that the more near-term scenario would be to pursue an arrangement with another established provider like Verizon Wireless.
"At this point, we can use the Verizon service or some other service that Qwest would provide through the arrangements they have to provide that to our customers," said Stewart Ewing, CFO and EVP of CenturyLink. "We're not under any pressure to build out the 700 MHz at this point because the first build out deadline is not until 2013 and you don't lose the spectrum until 2016 if you fail to build out by then."
Outside of selling wireless services to consumers, CenturyLink and the soon-to-be-acquired Qwest plan to aggressively expand their respective wireless backhaul service sets.
CenturyLink, for one, revealed in its Q4 2010 earnings call yesterday that a big portion of its 2011 $1 billion capital budget will include a strong focus on building fiber out to more cell sites throughout 2011.
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