The Federal Communications Commission (FCC) approved late Wednesday
afternoon Verizon Wireless’ $3 billion cash deal for NextWave’s spectrum
licenses, only one day after a federal bankruptcy court approved NextWave’s
reorganization plan.
The deal allows Verizon Wireless, a joint venture between regional carrier
Verizon Communications and British telecom Vodafone
, to boost its wireless capacity in 22 markets, including
Baltimore, Boston, Los Angeles, New York and Washington, D.C. It also
expands its coverage into the Tulsa, Okla., area.
Verizon Wireless plans to pay for the purchase of the 10 megahertz and 20
megahertz licenses through cash flow from operations and inter-company
loans.
While the FCC has not officially announced its approval of the spectrum
sale, Verizon Wireless spokeswoman Nancy Stark confirmed the federal
blessing. The transaction already has been approved by the bankruptcy court
and has cleared the Hart-Scott-Rodino antitrust review process.
The bankruptcy court’s reorganization approval also clears the way for
NextWave to launch commercial broadband operations in Las Vegas and New York
City.
“Today is a very special day for NextWave and all its stakeholders,” Allen
Salmasi, NextWave’s chairman and CEO, said in a statement after the bankruptcy court approved the reorganization plan. “It has been a long and challenging road
to get to this moment, which makes it all the more special. We are pleased
that the years of effort have resulted in a plan that pays creditors in full
and provides for significant distributions to equity holders.”
NextWave filed for bankruptcy protection six years ago after it was unable
to produce nearly $5 billion for spectrum licenses it won in a government
auction.
The FCC revoked the spectrum rights NextWave won in the controversial 1996 FCC
auction, arguing that the company had paid only a fraction of what it
promised and re-auctioned the rights to companies, such as Verizon and
VoiceStream.
But NextWave sued, contending that U.S. bankruptcy laws protected the
company from the FCC license revocation. The dispute reached the Supreme
Court in January 2003, with the court ruling that the FCC had improperly
seized more than 200 wireless licenses from NextWave. The FCC was forced to
refund the $16 billion in proceeds from the sale of NextWave’s licenses.
