AT&T offloads 2.5 GHz spectrum to Clearwire for $300M

Clearwire Corp. was the winner of AT&T Inc.’s mandated spectrum sell-off, agreeing to spend $300 million for 2.5 GHz spectrum in 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. 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, 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.
Interestingly, Clearwire is testing mobile WiMAX technologies, 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 if demand dictates. The company has not yet said when it would offer the shares.
This is the second IPO attempt for Clearwire; the company last year filed IPO plans, but canceled shortly thereafter following a $900 million cash infusion in the company by Intel Corp. and Motorola Inc.