Cingular to Buy NextWave Licenses
Mobile telephone operator Cingular Wireless agreed to buy some wireless-spectrum licenses from NextWave Telecom Inc. for about $1.4 billion, people familiar with the matter said.
The sale, which must be approved by U.S. Bankruptcy Court, would give NextWave its first income from licenses that it won in Federal Communications Commission auctions in 1996. The U.S. Supreme Court in January rejected an FCC effort to reclaim them from NextWave.
Cingular, an Atlanta-based venture of SBC Communications Inc. and BellSouth Corp., will buy about a fifth of the licenses to patch gaps in its network. The pact may spur Verizon Wireless and AT&T; Wireless Services Inc. to make a competing offer, an analyst said.
Cingular “would be able to potentially build out its own network in markets where it currently has holes,” said Peter Friedland, an analyst at W.R. Hambrecht & Co. in San Francisco.
NextWave Senior Vice President Michael Wack and Cingular spokeswoman Jennifer Bowcock declined to comment.
The companies plan to file the agreement as early as today in court in White Plains, N.Y., one person said. Under bankruptcy rules, other bidders can make counter-offers for assets being sold by a company in Chapter 11.
Shares of Hawthorne, N.Y.-based NextWave rose 31 cents, or 12%, to $2.93 in over-the-counter trading.
NextWave bid $4.8 billion and won 90 licenses in auctions in 1996 and 1997. Licenses give the owner the right to transmit wireless calls over specific frequencies. The value of the frequencies tumbled to as little as $1 billion soon afterward, in large part, NextWave says, because the FCC flooded the market with additional airwaves.
NextWave has said it may sell all the spectrum or keep some to form its own wireless company. The company last year lined up $5.5 billion in financing to build a nationwide network, including a $300-million investment from San Diego-based Qualcomm Inc. and a $2.5-billion loan commitment from UBS Warburg.
NextWave still owes about $4.3 billion plus interest for the licenses, said David Kaut, an analyst with Legg Mason.
Any sale must be approved by the FCC.
Shares of San Antonio-based SBC rose 6 cents to $23.63 on the New York Stock Exchange; Atlanta-based BellSouth fell 2 cents to $25.11.
