YOU ARE AT:Archived ArticlesWorldCom MMDS assets go to BellSouth

WorldCom MMDS assets go to BellSouth

BellSouth Corp. has agreed to buy WorldCom Inc.’s multichannel multipoint distribution system licenses for $65 million in an agreement the two companies reached last month.

BellSouth’s bid for the company’s fixed-wireless assets is a “stalking horse” bid, in which a bankrupt company chooses one bid to set the bar for other bidders.

WorldCom, which filed for bankruptcy protection last year, put its MMDS, Multipoint Distribution Service, Wireless Communications Service and Instructional Television Fixed Service spectrum up for sale in October. In a filing at the U.S. Bankruptcy Court for the Southern District of New York last month, WorldCom said it received 10 bids for those assets, which it narrowed down to two, and eventually selected BellSouth’s bid. The company said BellSouth’s bid represented the highest and best offer for the assets.

“BellSouth has signed an agreement with MCI (WorldCom) to purchase its MMDS spectrum,” confirmed Jeff Battcher, director of corporate communications, financial, at BellSouth. “The agreement now must be approved by the bankruptcy court, so it would be premature to discuss the matter further.”

An auction process hearing is scheduled for June 3. BellSouth is entitled to a $1.4 million breakup fee if a competing offer is accepted during the auction process.

The sale includes all FCC license applications, certain spectrum leases, tower leases, owned towers, ground leases and other contracts, certain network equipment and other assets.

WorldCom, which was a dominant player along with Sprint Corp. in the MMDS market, deployed high-speed wireless Internet access service in 13 markets, including Minneapolis; Kansas City, Mo.; and a variety of markets in the southeastern United States. The company spent more than $1 billion to acquire its fixed-wireless assets.

The fixed-wireless sector stumbled on difficult times and has yet to recover. WorldCom declared bankruptcy and Sprint discontinued its Broadband Direct fixed-wireless service. Meanwhile fixed-wireless companies including XO Communications Inc., Teligent Inc. and Winstar Communications also declared bankruptcy.

But several signs point to a possible recovery for the struggling industry. Several fixed-wireless vendors have received investments during the past several months. And BellSouth’s agreement with WorldCom could mean the company is looking to bolster its fixed-wireless business. The company earlier this year announced a trial of its wireless broadband technology in Daytona, Fla. BellSouth owns additional fixed-wireless spectrum in Georgia and Louisiana.

The deal is subject to bankruptcy court and Federal Communications Commission approvals.

ABOUT AUTHOR