O2 Secure Wireless said today it will use a $33 million loan from the USDA's Rural Utilities Service to deploy LTE in 65 underserved markets in Florida, Kentucky, Mississippi, Alabama, North Carolina and South Carolina.
The network will provide LTE service to more than 500,000 people when completed. O2 said it will "construct the most technologically advanced LTE network presently available," with peak download speeds of 25 Mbps.
The company did not say what spectrum it plans to use for the service and could not be immediately reached for comment.
O2 received preliminary approval for RUS funding in August and has submitted its loan application for review. The government hasn't yet approved the loan, and the cash isn't in hand.
The company will seek other sources of funding for the project if government financing falls through.
The RUS loan is being offered on more favorable terms than commercial loans, O2 CEO Val Kazia said. The loan will be amortized over the life of the network equipment and will have an interest rate equivalent to the 10-year Treasury bond, which is presently at 2 percent, he said.
"The remarkably low interest rates are extremely attractive, as compared to traditional commercial loans, whose offers have been presented at prime plus 275 basis points," Kazia said.
The RUS loan program also offers interest-only payments for the first 12 months during the construction of the network.
The government's rural broadband program provides funding for networks in rural areas with populations of 20,000 residents or less.
Rural markets are less profitable than urban areas because of their sparse, widely spread populations and are often left unserved by top-tier wireless providers. The FCC and the Obama administration have made universal broadband access a top priority, particularly in rural areas.