SOUTHEAST SPECTRUM GRAB: WiMAX carrier Clearwire snaps up AT&T’s 2.5 GHz spectrum for $300 million

Clearwire Corp. was the winner of AT&T Inc.’s mandated spectrum sell-off, agreeing to spend $300 million for 2.5 GHz spectrum covering portions of the southeastern United States.
AT&T committed to unloading the spectrum in an effort to gain approval from the Federal Communications Commission for its acquisition of BellSouth Corp., which closed late last year. Clearwire had pushed the FCC to require the spectrum divestitures as a requirement for approving the deal.
The sale includes EBS spectrum, which is reserved for accredited educational institutions, and another slice used for commercial delivery of high-speed wireless broadband services.
The spectrum is currently licensed to or leased by the recently acquired BellSouth. The deal is expected to close “promptly” following government approvals, the companies said.
Shares of AT&T were largely unaffected by the news, gaining 8 cents to $37.56.
The deal is notable for Clearwire, which is working to expand its pre-WiMAX network throughout major U.S. cities. Clearwire, backed by wireless pioneer Craig McCaw, currently offers a wireless alternative to DSL and cable connections through its high-speed network, which currently supports fixed-rather than mobile-connections. The company is using a technology similar to the recently approved WiMAX standard, and has said it will move to the WiMAX standard eventually.
The company said that, as of year-end 2006, it offered pre-WiMAX services in 34 markets and covered an estimated 8.6 million people, with a wireless broadband customer base of more than 206,000 subscribers.
Clearwire, attempting to secure additional spectrum to support its expanding wireless broadband reach, pushed for federal regulators to force a merged AT&T-BellSouth to have to sell its 2.5 GHz spectrum in 11 markets as a condition in granting the merger.
Clearwire told the Federal Communications Commission that a merged AT&T-Bellsouth would have the largest wireline DSL broadband network, the largest national narrowband voice/data network, the largest HSDPA-capable wireless network and a nearly nationwide 2.3 GHz spectrum footprint.
Clearwire claimed that the spectrum was not substantial to an AT&T-BellSouth combo to support an alternative wireless broadband platform, but was critical to other companies’ deployment of 2.5 GHz broadband systems. Companies like Clearwire.
Interestingly, Clearwire is testing mobile WiMAX technologies in parts of Oregon, which could put the company in direct competition with established wireless carriers like AT&T Inc.’s Cingular Wireless L.L.C. and Verizon Wireless.
As part of Clearwire’s expansion efforts, and to fund its spectrum purchases, the company is hoping to raise $575 million through an initial public offering. Clearwire recently set its proposed IPO terms at 20 million shares at a price range of $23 to $25 per share, plus an additional 3 million shares if demand dictates. The company has not yet said when it would offer the shares. This is the second IPO attempt for Clearwire.