Broadcaster Seven Network has made an off-market cash bid of up to AU$127 million to acquire wireless ISP Unwired in a move designed to guarantee access to a national wireless network.
Seven is offering Unwired shareholders 45c per share, or 50c per share should Seven gain over 90 percent of Unwired shares by 8 November.
The two scenarios value Unwired at either AU$114 million or AU$127 million.
The proposed acquisition will give Seven access to the 3.5GHz WiMax spectrum licensed nationally to Unwired.
WiMax -- a wide area wireless network technology which can theoretically allow for network speeds of up to 70MB per second or up to fifty kilometres in range with speed and range being in inverse proportion to each other -- is commonly seen as an alternative data carriage technology to the terrestrial networks dominated by Australia's largest carrier, Telstra.
"We're acquiring a strong business and spectrum that will build our company's ability to compete in new media technologies," Seven CEO Kerry Stokes said in a statement.
"Despite delays in the certification of the technology to date, we believe in the potential of WiMax as a mobile broadband solution and as an efficient platform for delivering content solutions in multicast and broadcast environments."
Unwired chief financial officer Ian McGregor told ZDNet Australia that Unwired's "key asset" is its WiMax spectrum -- more so than its 70,000 strong customer base of subscribers.
"WiMax is recognised worldwide as a technology on which you can build a very successful business," he said. "But to deploy services on that spectrum, you need capital."
McGregor said Unwired had several options available to it to finance a WiMax network deployment, none of which it had begun to explore before Seven made the offer.
"When we first did the AU$37 million start-up funding agreement with Intel, they told us that at the right time -- when we are ready to deploy the network -- that they would assist us in talking to the right people to finance it," he said. "Even today there is nothing to stop that happening."
Unwired directors, with the exception of Chris North who abstained due to a conflict of interest, have nonetheless recommended shareholders take up the Seven offer.
McGregor said he expects Seven's acquisition, in combination with the recent purchase of 19.9 percent of voice-over-IP provider Engin, will satisfy Seven's desire for its own network to deploy content and voice services.
Network access has been a "constant frustration" for Seven, he said.
In July of this year, Seven lost a legal battle waged against News Limited, Telstra, PBL and Foxtel, in which the broadcaster accused its competitors of conspiring to destroy Seven's cable television venture, C7.
"Seven wanted to gain equal access to communications technology to help deploy their products and services," McGregor said. "They have been trying to break down the barriers of that oligopoly."
But after losing AU$200 million on the C7 case, McGregor said Seven's directors would "look at the two billion you have in the bank, and start thinking 'maybe I should have my own network'."
The Unwired acquisition also plays into Seven's strategic stake in Engin, and the investment both of those companies have made in introducing the popular American Digital Video Recorder appliance TiVo to the Australian market next year.
There is a strong possibility that Seven and Engin will be able to deliver bundles of telephony services, via Engin, and home entertainment services, via TiVo, wirelessly via the acquired WiMax network.
Seven's offer gives Unwired shareholders a premium on the company's share price performance averaged over the last three months, but speculation over Unwired's future saw the company's share price rise from a low of 25c early in the month to a high of 49c earlier this week.
Seven's offer closes 9 November.