Following weeks of rumors, Verizon Wireless said it has signed a definitive agreement to purchase all of NextWave Telecom Inc.’s spectrum licenses covering 73 million potential customers in 23 markets for $3 billion. Verizon Wireless noted the acquisition, which is scheduled to close by the middle of next year, will be made through the purchase of NextWave Telecom following the completion of NextWave’s bankruptcy reorganization.
The deal includes both 10-megahertz and 20-megahertz licenses in the 1.9 GHz spectrum band that NextWave originally gained control over during the Federal Communications Commission’s spectrum auctions in the mid-1990s, which have subsequently been subject to numerous court cases following NextWave’s bankruptcy filing shortly after the original auctions. The licenses include 20 megahertz of spectrum in a number of top markets, including New York, Boston, Baltimore and Washington, D.C., as well as 10 megahertz of spectrum in Denver, Detroit, Los Angeles, Philadelphia and Portland, Ore.
Analysts noted the purchase price of $2.85 per megahertz per pop was more per megahertz per pop than Cingular Wireless L.L.C.’s $1.4 billion purchase of 34 licenses earlier this year from NextWave, but well below the $4.63 per megahertz per pop Verizon Wireless acquired when it bought 10 megahertz of spectrum in New York from NextWave at an auction this past summer.
Verizon Wireless said it would use the additional capacity to enhance its network as well as expand its footprint into new markets.
NextWave noted that as part of the deal it will pay the FCC $71 million plus any other amounts owed to the federal government as under the terms of the Global Resolution Agreement signed between the two parties in April. NextWave also said that all creditors will be paid in full, and existing shareholders will receive a distribution of cash and interest in the newly formed operating company.
“The acquisition agreement with Verizon Wireless represents the best available transaction with respect to our PCS spectrum assets for the benefit of all our stakeholders,” said Allen Salmasi, chairman and chief executive officer of NextWave. “The plan we intend to file is not the end of NextWave; it’s a new beginning. The company looks forward to continue developing the promising opportunities generated by the broadband wireless activities we have undertaken in recent years.”
