Acquisitions and Divestitures

3 Months Ended

Mar. 31, 2020

Note 3. Acquisitions and Divestitures

Spectrum License Transactions

In March 2020, the Federal Communication Commission's (FCC) incentive auction for spectrum licenses in the upper 37 Gigahertz (GHz), 39 GHz, and 47 GHz bands concluded. As an incumbent licensee, our 39 GHz licenses provided us with incentive payments that could be applied towards the purchase price of spectrum in the auction or settled in cash. Verizon participated in this incentive auction and was the high bidder on 4,940 licenses, which primarily consisted of 37 GHz and, to a lesser extent, 39 GHz spectrum. The price payable for these licenses amounted to $3.4 billion, of which $1.8 billion will be settled with the relinquished 39 GHz licenses. Through March 31, 2020, Verizon paid cash deposits of approximately $325 million, including $101 million paid in December 2019. The remaining $1.3 billion payment was made in April 2020. The timing of when the new reconfigured licenses will be issued and the cancellation of the licenses relinquished in this auction will be determined by the FCC after all payments have been made. At March 31, 2020, substantially all of our 39 GHz licenses have been reclassified to assets held for sale, included in Other assets in our condensed consolidated balance sheet, and adjusted to a fair value of $1.6 billion. The fair value represents a Level 2 measurement as defined in Accounting Standards Codification 820, Fair Value Measurements and Disclosures and was determined based on the final auction price for each defined geographical area. As a result, a pre-tax net loss of $1.2 billion ($914 million after-tax) related to the spectrum license auction was recorded in Selling, general and administrative expense in the condensed consolidated statement of income because their exchange for new licenses has commercial substance.

During the three months ended March 31, 2020, we entered into and completed various other wireless license acquisitions for cash consideration of approximately $146 million.

Other

During the three months ended March 31, 2020, we completed various other acquisitions for insignificant amounts of cash consideration.

In April 2020, we entered into a definitive purchase agreement to acquire Blue Jeans Network, Inc., an enterprise-grade video conferencing and event platform, whose services will be sold to Business customers globally. The transaction is subject to customary regulatory approvals and closing conditions and is expected to close in the second quarter of 2020.