Cingular, NextWave Reach Deal For Spectrum Licenses - InformationWeek

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Cingular, NextWave Reach Deal For Spectrum Licenses

The $1.4 billion deal would help the nation's second-largest mobile phone carrier expand and improve service in markets where it already operates.

ATLANTA (AP) -- Cingular Wireless LLC, the nation's No. 2 mobile phone carrier, cited its growth potential as it announced Tuesday that it had reached a deal to buy 34 spectrum licenses from bankrupt NextWave Telecom Inc. for $1.4 billion.

The deal, expected since last week, mainly would help Cingular expand and improve service in markets where it already operates. Cingular is a joint venture of two Baby Bell phone companies, Atlanta-based BellSouth Corp. and San Antonio-based SBC Communications Inc.

The agreement must be approved by the Federal Communications Commission and the U.S. Bankruptcy Court in White Plains, N.Y., where NextWave filed for Chapter 11 protection in 1998. Other bidders can come in and make a higher offer.

"While this deal allows Cingular to enhance our spectrum position in many of our larger existing markets, it is primarily for the future growth of the company," said Cingular chief operating officer Mark Feidler. "This spectrum will allow us more room to provide additional services and products, to expand coverage in some of our key markets and to better accommodate overall growth."

NextWave Chairman Allen Salmasi said the deal allows the Hawthorne, N.Y.-based company to satisfy a significant portion of its obligations to the government and to other creditors.

The deal calls for Cingular to pay $1.4 billion in cash and obtain FCC authorization to operate on 10 megahertz of spectrum in Los Angeles; Chicago; San Francisco; Dallas; Houston; Washington; Atlanta; Boston; San Diego; Baltimore; Portland, Ore.; Sacramento, Calif.; Las Vegas; Salt Lake City; Allentown, Pa.; Harrisburg, Pa.; Springfield, Mo.; Sarasota, Fla.; Manchester, N.H.; Portland, Maine; Lakeland, Fla.; York, Pa.; Lancaster, Pa.; Poughkeepsie, N.Y.; Reading, Pa.; Hagerstown, Md.; Temple, Texas; Gainesville, Fla.; Tyler, Texas; Joplin, Mo.; Salisbury, Md.; and Kankakee, Ill.

Cingular would also obtain FCC authorization to operate on 20 megahertz in Tampa, Fla., and El Paso, Texas.

Cingular currently provides service in most of those markets.

These spectrum licenses have been lying dormant since NextWave bought them for $4.7 billion, only to then file for bankruptcy. The FCC confiscated the licenses and resold them at a huge profit.

But in January, the U.S. Supreme Court ordered the FCC to give back the licenses, ruling that the agency did not have the authority to take licenses away from NextWave while it was reorganizing its finances.

The decision allowed NextWave to finish building a network or sell the licenses to other companies, freeing up precious wireless spectrum in dozens of crowded markets.

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