AT&T Buys NextWave for $25M (8/2/12)
AT&T agreed to acquire NextWave Wireless, which holds licenses in the wireless communication services (WCS) and advanced wireless service (AWS) bands.
Under the terms of the agreement, AT&T will acquire all the equity of NextWave for approximately $25 million plus a contingent payment of up to about $25 million, and through a separate agreement with NextWave’s debt holders, all of the company’s outstanding debt will be acquired by AT&T or retired by NextWave, for a total of $600 million in cash. The outstanding debt held by NextWave’s bondholders will be satisfied through cash and a transfer of selected NextWave assets. NextWave’s debt holders agreed to the terms, and a majority of its shareholders agreed to support the transaction.
WCS spectrum was first auctioned in 1997, but has not been used for mobile Internet applications because of technical rules designed to avoid possible interference to satellite radio users in adjacent spectrum bands. In addition, NextWave declared bankruptcy after buying C-block PCS licenses in 1996 and was in a legal battle with the FCC for several years.
In June, AT&T and Sirius XM filed a joint proposal with the FCC that would protect the adjacent satellite radio spectrum from interference and enable WCS spectrum for the first time to be used for mobile Internet service. The proposed solution on WCS spectrum, still under review by the FCC, effectively creates much-needed new spectrum capacity, an AT&T statement said.
AT&T said the proposed WCS rule changes and NextWave acquisition represent an alternative approach to creating additional wireless network capacity to help support increasing wireless data usage on smartphones and tablets. If approved, the proposal will enable AT&T to begin initial deployment of WCS spectrum for added 4G Long Term Evolution (LTE) capacity in about three years.
The transaction is subject to review by the FCC and to other customary closing conditions. Additionally, NextWave’s transfer of assets may be subject to Hart-Scott-Rodino review by the Federal Trade Commission and Department of Justice. AT&T said it plans to close the transaction by the end of 2012.
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