AT&T may not have been able to buy up T-Mobile and all its precious radio frequency spectrum, but it shouldn't have any trouble acquiring NextWave Wireless with its Wireless Communication Services (WCS) and Advanced Wireless Service (AWS) spectrum licenses.
Under the terms of the buyout, AT&T will acquire all of NextWave's equity for approximately $25 million plus a contingent payment of up to approximately $25 million and, through a separate agreement with NextWave’s debt-holders, NextWave outstanding debt for $600 million in cash. NextWave, which s a holding company for mobile multimedia businesses and a wireless spectrum portfolio, has been mired in the pink sheets, so it comes as no surprise that its debt-holders have agreed to the terms, and a majority of shareholders support the transaction.
What AT&T gets for it's $650-million is access to WCS spectrum. Until recently, WCS had little value because FCC technical rules designed to avoid possible interference to adjacent satellite radio spectrum bands kept it from being used for mobile Internet. In June, AT&T and satellite radio giant Sirius XM filed a joint proposal with the FCC that would protect the adjacent satellite radio spectrum from interference and enable the use of WCS spectrum for mobile Internet service.
While this proposal is still under review by the FCC, AT&T clearly hopes that the FCC will approve the proposed WCS rule changes. If all goes well on the regulatory front this will give AT&T and alternative approach for additional 4G broadband. This won't come quickly though. If approved, AT&T could begin initial deployment of WCS spectrum for added 4G LTE capacity, in about three years.
As usual, the transaction is subject to review by the Federal Communications Commission 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 anticipates closing the transaction by the end of 2012.