Verizon To Fund $36B 5G Airwaves Payment Via Debt: Bloomberg

Verizon Communications Inc (NYSE: VZ) paid $8.2 billion to the U.S. Treasury Wednesday and intends to raise an additional $36 billion in debt to fund the airwaves payment, Bloomberg reports.

What Happened: Verizon raised $12 billion in a bond sale in November and has set up a $25 billion bank facility to cover the major airwaves investment.

The wireless carrier competes with rival T-Mobile US Inc (NASDAQ: TMUS) to expand market share in vital mid-band frequencies crucial to the new 5G wireless services. Verizon emerged as the highest bidder at $45 billion in the 5G spectrum auction last month.

Why It Matters: The carrier plans to double its revenue growth to 4% by 2024 by tapping the 5G wave. Therefore, it earmarked an additional $10 billion in capital expenditures over three years to take care of the 5G expansion plans' incremental costs. The incremental costs are expected to cut profit by 10 cents a share in 2022 and 20 cents a share in 2023.

The airwaves are credited for their capability to travel a long distance and carry massive data. They are estimated to drive new revenue growth potential upon deployment for next-generation mobile devices, autonomous vehicles, health-care equipment, and manufacturing facilities.

Verizon plans to cover 100 million people with its new 5G C-band and millimeter-wave networks by year-end and reach coast-to-coast coverage by 2024.

Verizon has made a significant bet on its network, capitalizing on 5G prospects after years of passing up large M&A deals like AT&T Inc (NYSE: T).

Verizon Communications will hold its 2021 Virtual Investor Day today, starting at 6 p.m. EST (Webcast link)

Price action: VZ shares are up 0.65% at $56.71 in the pre-market session on the last check Thursday.

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