AT&T Buys Nextwave Wireless for $650 Million to Secure Access to Additional LTE Radio Spectrum

­USA based AT&T plans to acquire NextWave Wireless, a holder of spectrum that could be used for mobile data services, for US$650 million including the settlement of its debt. NextWave holds licenses in the Wireless Communication Services (WCS) and Advanced Wireless Service (AWS) bands.

Most of the price AT&T would pay for NextWave, about $550 million, would be for the company’s debt. AT&T would also pay about $25 million for NextWave’s equity, plus a contingent payment of as much as $25 million. It expects to close the transaction, pending approval by the FCC and other regulators, by the end of this year

WCS spectrum was first auctioned in 1997, but has not been utilized for mobile Internet usage due to technical rules designed to avoid possible interference to satellite radio users in adjacent spectrum bands.

AT&T said the proposed WCS rule changes and NextWave acquisition represent an alternative approach to creating additional wireless network capacity to help support wireless data usage on smartphones and tablets. If approved, the proposal will enable AT&T to begin initial deployment of WCS spectrum for added LTE capacity, in approximately three years.

NextWave’s debtholders have agreed to the terms, and a majority of its shareholders have agreed to support the transaction.