AT&T to buy Verizon spectrum to meet wireless demand

NEW YORK (Reuters) - AT&T Inc said on Friday it has agreed to buy wireless airwaves from Verizon Wireless for $1.9 billion in cash, plus spectrum licenses in five markets, as it looks to expand its wireless network capacity.

AT&T said the licenses it is buying cover a population of 42 million people in 18 U.S. states.

It expects to close the deal, which is subject to regulatory approval, in the second half of 2013.

AT&T needs to boost its capacity for high speed wireless services to meet increasing demand for mobile internet services for smartphones, tablet computers and other devices.

To do this it has been busy buying wireless spectrum in the last year since the failure in late 2011 of its $39 billion bid to buy T-Mobile USA, a unit of Deutsche Telekom AG , due to regulatory opposition.

Earlier this week AT&T said it agreed to buy Atlantic Tele-Network Inc's wireless business operating under the Alltel brand. In August it agreed to buy wireless company NextWave Wireless Inc for its spectrum holdings for $50 million and $550 million of debt.

Verizon Wireless, a venture of Verizon Communications and Vodafone Group Plc , committed to sell a chunk of spectrum last year while it was seeking approval for its agreement to buy spectrum from cable operators.

(Reporting by Sinead Carew; Editing by Bernadette Baum and Steve Orlofsky)