AT&T acquires NextWave Wireless for $25 million, will use WCS spectrum to grow LTE network

AT&T is looking to boost their range of 4G LTE coverage with the announcement that the carrier has acquired NextWave Wireless for $25 million. NextWave holds licenses for both the AWS spectrum typically associated with LTE coverage as well as the untapped WCS spectrum, giving AT&T access to greater network capacity.

Before the carrier can deploy the new bands, the FCC will have to sign off on a joint proposal between AT&T and Sirius XM that would protect adjacent spectrum typically reserved for satellite radio while freeing up WCS for mobile data transmission. The deal is still pending regulatory approval, but if it goes through it should help to address some of the same network issues AT&T hoped to overcome through the failed merger with T-Mobile.

AT&T Agrees to Acquire NextWave Wireless, Inc.

DALLAS–(BUSINESS WIRE)–AT&T* announced today that it has agreed to acquire NextWave Wireless, Inc. NextWave holds licenses in the Wireless Communication Services (WCS) and Advanced Wireless Service (AWS) bands.

WCS spectrum was first auctioned in 1997, but has not been utilized for mobile Internet usage due to technical rules designed to avoid possible interference to satellite radio users in adjacent spectrum bands.

In June, AT&T and Sirius XM filed a joint proposal with the FCC that would protect the adjacent satellite radio spectrum from interference and enable WCS spectrum — for the first time — to be used for mobile Internet service. This proposed solution on WCS spectrum, which is still under review by the FCC, effectively creates much-needed new spectrum capacity.

AT&T said the proposed WCS rule changes and NextWave acquisition represent an alternative approach to creating additional wireless network capacity to help support skyrocketing wireless data usage on smartphones and tablets. If approved, the proposal will enable AT&T to begin initial deployment of WCS spectrum for added 4G LTE capacity, in approximately three years.

Under the terms of the agreement, AT&T will acquire all the equity of NextWave for approximately $25 million plus a contingent payment of up to approximately $25 million and, through a separate agreement with NextWave’s debtholders, all of the company’s outstanding debt will be acquired by AT&T or retired by NextWave, for a total of $600 million in cash. The outstanding debt held by NextWave’s bondholders will be satisfied through cash and a transfer of selected NextWave assets. NextWave’s debtholders have agreed to the terms, and a majority of its shareholders have agreed to support the transaction.

The transaction is subject to review by the Federal Communications Commission and to other customary closing conditions. Additionally, NextWave’s transfer of assets may be subject to Hart-Scott-Rodino review by the Federal Trade Commission and Department of Justice. AT&T anticipates closing the transaction by the end of 2012.

*AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc.