AT&T poised to acquire NextWave Wireless; lines up series of 700MHz acquisitions

3 Aug 2012

AT&T Mobility has announced that it has agreed a deal worth up to USD600 million to acquire San Diego-based spectrum holding company NextWave Wireless, a major holder of 2.3GHz Wireless Communication Services (WCS) frequencies. WCS spectrum was first auctioned in 1997, but has never been utilised for mobile broadband usage due to technical rules designed to avoid possible interference with satellite radio users in adjacent spectrum bands. According to Fierce Wireless the deal will effectively combine the nation’s two largest WCS spectrum holders (AT&T is the largest and NextWave is the second largest). Under the terms of the deal, AT&T will acquire all the equity of NextWave for approximately USD25 million, plus a contingent payment of up to USD25 million. AT&T will also, through a separate agreement with NextWave’s debtholders, acquire or retire all of the company’s USD550 million in outstanding debt, for a total of USD600 million in cash. The deal is subject to review by the Federal Communications Commission (FCC) and the Department of Justice (DoJ), but AT&T expects the transaction to close by the end of 2012.

In June this year, AT&T and satellite radio broadcaster Sirius XM filed a joint proposal with the (FCC) that would protect Sirius’s adjacent satellite radio spectrum from interference and finally enable WCS spectrum to be used for mobile broadband services. This proposed solution, although still under review by the FCC, effectively frees up new, much needed spectrum capacity. AT&T is hoping to use the WCS spectrum in combination with its 700MHz and AWS holdings for LTE service in the coming years.

In related news, according to a series of regulatory filings, AT&T has continued to add to its already-substantial 700MHz spectrum holdings, lining up a number of transactions. The mobile giant intends to purchase frequencies from the following companies: McBride Spectrum Partners (a lower 700MHz B Block licence in Pennsylvania), Farmers Telephone Company (a lower 700MHz C Block licence in Colorado), Com South Tellular (two lower 700MHz C Block licences in Georgia) and David L. Miller (13 lower 700MHz B Block licences covering Florida, Georgia, Pennsylvania, Tennessee and Texas). After seeing its controversial USD39 billion acquisition of cellular rival T-Mobile USA fall foul of the FCC in December, AT&T has changed tack and pursued a number of smaller spectrum acquisitions instead. With the FCC’s first 700MHz coverage review less than a year away, the rush to offload unused spectrum is arguably well underway. The regulator’s requirements for the band stipulate that all licensees of the 700MHz Lower A and B blocks must cover 35% of the area covered by their spectrum by June 2013. If operators fail to meet the deadline, the amount of time they will have to reach the next deployment deadline will be reduced by two years, giving them eight years instead of ten to cover 70% of the area attached to their licences.

United States, AT&T, AT&T Communications, NextWave Wireless