AT&T Eyes WCS Spectrum Use With NextWave Buy

NextWave manages and maintains wireless spectrum licenses in the 2.3GHz Wireless Communication Services (WCS) and Advanced Wireless Service (AWS) bands. AT&T has been active in trying to convince regulators to allow the use of the WCS spectrum for mobile Internet service and thus create what AT&T described as "much-needed new spectrum capacity."

AT&T and Sirius XM in June filed a proposal with the Federal Communications Commission on the subject, and in a statement announcing the acquisition, AT&T said that a WCS rule change, combined with NextWave, would allow it to begin deploying WCS spectrum for added 4G LTE capacity as early as 2015.

Under the agreement, AT&T acquires all of NextWave's equity for about $25 million, plus a contingent payment of up to about $25 million. A separate agreement with NextWave's debtholders states that NextWave debt will either be retired by NextWave or acquired by AT&T for about $600 million cash.

AT&T anticipates closing the deal by the end of 2012.

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NextWave represents AT&T's first major acquisition since dropping its proposed $39 billion buy of T-Mobile USA in December 2011. That deal, first announced in March 2011, would have made AT&T the top mobile carrier in the U.S., but met widespread opposition from major regulatory bodies, industry watchdogs and customer groups. AT&T was on the hook for a $3 billion breakup fee owed to T-Mobile USA parent Deutsche Telekom as a result of the agreement.

Ralph De La Vega, president and CEO of mobility at AT&T, told investors in April that AT&T would focus primarily on smaller acquisition targets going forward. Rumors surfaced this past spring that AT&T had been in talks to acquire Leap Wireless, among other targets.

Mobile data traffic demands will continue to surge in the coming years, as demand for mobile devices and mobile Internet access explodes. Cisco's Virtual Networking Index Global Data Traffic Forecast Update, released in February, put the annual run-rate of global mobile data traffic at 130 Exabytes per year by 2016.