AT&T on Thursday announced that it has decided to buy NextWave Wireless Inc., mainly a holder of spectrum rights for $600 million in cash. NextWave was going through bad times and will use the amount to pay off its debt.
Furthermore, the company went ahead to announce that it has also agreed to buy spectrum from Comcast Corp., a popular cable company and Horizon Wi-Com, a Miami based company that intended to start its own broadband services. However, AT&T did not announce the amount that it had paid to buy these companies.
Comcast, who was also planning to start its own wireless network is now off the plan and has decided to sell most of its spectrum to Verizon Wireless.
Ananlyst John Hodulik is of the view that AT&T must have cracked the three deals in less than $1 billion.
What needs to be noticed here is that all the three deals involve spectrum in one particular band. When the company will put all three together it will be able to provide its services nationwide and will also notice huge boost in its capacity. Company has made it clear that it may take three years time to put spectrum to use.
The problem that AT&T is facing in using the spectrum is that a radio band lies close to frequencies that are used for satellite communications and therefore cause disturbance. The company has requested Federal Communications Commission to find a solution for the same.
AT&T had been looking for wireless spectrum for quite some time now. Last year it had agreed to buy T-Mobile USA for $39 billion but the deal did not materialize.
Before closing the deal, the company has made it clear that out of the $600 million for NextWave, it will use $25 million for its shares and an additional $25 million if certain conditions are met. The deal that AT&T has cracked does not involve all of NextWave’s spectrum. Some Canadian and U.S. holdings will be placed into a new holding company, to be owned by its debtholders.