Verizon Wireless will pay $930 million for NextWave Telecom’s New York-area
spectrum license, the second key industry development in as many days.
The 10 megahertz license covers New York City, Westchester and Rockland
counties and parts of northern and central New Jersey. It will be
used to expand Verizon Wireless’ network capacity in the area for voice and
data traffic.
The transaction is expected to close by year’s end. The bid will be
submitted to the federal bankruptcy court overseeing NextWave’s Chapter 11
proceedings next week. Applications to transfer the licenses must also be
approved by antitrust regulators and the Federal Communications Commission
(FCC).
A Verizon Wireless spokeswoman was not immediately available for comment.
Analysts at SG Cowen & Co. said the pickup was a positive for the carrier
and that the price was in line with their estimates.
“We expect [Verizon Wireless] to continue its spectrum acquisitions as the
company rolls out its [next-generation] network nationwide,” SG Cowen said
in a note to investors.
The companies did not disclose whether there were other bids for spectrum.
Yesterday, Verizon Wireless
bashed
FCC commissioners for approving a spectrum swap with Nextel
to alleviate congestion of airwaves used by police and fire
departments.
Nextel will license 10 megahertz of contiguous spectrum currently used by
public safety agencies and private wireless licensees. Those users will be
relocated to a portion of the 800 megahertz band that will be turned over
from Nextel.
Verizon Wireless called the decision “bizarre” given that Nextel’s cell
phone traffic causes the interference.
It also deemed the FCC’s move a “multi-billion dollar windfall on Nextel at
taxpayer expense” and called on members of Congress and the Government
Accounting Office to investigate.
Verizon Wireless, as well as some telecom industry groups, had urged the FCC
to auction off the spectrum earmarked for its rival.
For nine-year-old NextWave, the spectrum auction to Verizon Wireless helps move
it toward its goal of emerging from Chapter 11 bankruptcy protection.
NextWave also auctioned off 10 MHz licenses in two Florida markets — Tampa
and Sarasota — for $43.5 million to MetroPCS.
Of the $973.5 million in proceeds, $398 million will go to the FCC as part
of an
agreement
struck in April to settle federal regulators claims against it.
“We are now on a path to emerge from bankruptcy with no debt, an attractive
spectrum footprint and significant cash reserves,” said NextWave Chairman, President and CEO Allen
Salmasi in a statement.
The company hopes to emerge from bankruptcy protection this fall.
