AT&T, in a bid to expand its 4G coverage, has announced an agreement to purchase NextWave Wireless. 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 approximately $25 million. 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 debtholders have agreed to the terms, and a majority of its shareholders have agreed to support the transaction.
NextWave holds licenses in the Wireless Communication Services (WCS) and Advanced Wireless Service (AWS) bands. NextWave will only hold its U.S. WCS and AWS spectrum assets at the time of the acquisition, with the remainder of its assets and liabilities, including its Canadian WCS spectrum and its 2.5 MHz EBS/BRS spectrum assets, being held by a new holding company (NextWave Holdco).
The deal could give AT&T more room on the airwaves for wireless broadband, but there are unresolved problems with some of NextWave’s radio bands, which lie close to frequencies that are used for satellite communications, and possible interference concerns have prevented them from being used. AT&T has asked the FCC to approve a solution that it says would prevent interference. If approved, the proposal will enable AT&T to begin initial deployment of WCS spectrum for added 4G LTE capacity, in approximately three years.
The transaction is subject to review by the Federal Communications Commission and to other customary closing conditions. AT&T anticipates closing the transaction by the end of 2012.