Today, AT&T announced that it will acquire NextWave Wireless for $650 million in order to beef up its WCS and AWS spectrum holdings. The AWS holdings aren’t that interesting, but the WCS ones are.
NextWave Wireless bought spectrum in the 1996 auction after it was spun off from Qualcomm in 1995. Following that, it also purchased spectrum in the AWS auction in 2006 after emerging from bankruptcy. It currently holds some EBS spectrum (which is the band that Clearwire uses), some AWS-1 spectrum (which T-Mobile USA and the Canadian carriers use), and WCS spectrum (which currently no one uses).
Now that AT&T and Sirius XM have agreed on how to make WCS useful for LTEdeployment, AT&T is buying NextWave in order to bulk up on WCS spectrum to replace the AWS spectrum it lost when the attempt to acquire T-Mobile USA failed. It is doing the same in order to bulk up its 700MHz holdings as well.
After AT&T, NextWave is the largest owner of WCS spectrum licenses. It holds nationwide collection of spectrum with C and D block spectrum, as well as a lot of A and B block spectrum in several regions. AT&T is paying $50 million for the company itself, and paying out $600 million to clear all outstanding debt that NextWave currently has not repaid. Additionally, some of NextWave’s assets may be used as cash equivalents for paying off debts, particularly EBS spectrum and maybe some of the less useful AWS spectrum.
Purchasing NextWave shows that AT&T is really serious about using WCS now. Its 700MHz holdings are not enough for a nationwide LTE network. It needs to utilize other bands, too. AT&T estimates that it will take three years for WCS spectrum to be usable for LTE, assuming that the FCC approves the proposal from AT&T and Sirius XM.