Verizon Buy of NextWave Licenses Faces Smooth Sailing
A rumored deal that would give Verizon Wireless another 20 MHz of NextWave spectrum in N.Y. for as much as $3 billion likely wouldn’t face many regulatory hurdles, sources said Fri. Experts said the deal may be easier to complete in the immediate aftermath of the Cingular-AT&T Wireless merger.
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NextWave and Verizon had no comment on reports that an announcement was near. Verizon previously announced a deal to buy 10 MHz of N.Y. spectrum for $930 million. Experts have viewed the carrier as the most likely candidate to buy the remaining 20 MHz in N.Y. if NextWave elects to sell the spectrum.
NextWave last week got an additional 10 days from a federal bankruptcy judge to file a reorganization plan. NextWave said in a filing with the court that it needed more time, since several deals on its remaining spectrum may be in the works. “At this point, the debtors have completed their analysis of a number of alternatives and have significantly narrowed such to a few potential transactions and alternatives,” the company said: “Each potential transaction or alternative involves a third party with respect to a significant aspect of the plan of reorganization to be proposed.” NextWave will have to make a filing on Fri.
NextWave’s filing seeking a delay, in combination with rising price of NextWave shares on the over-the- counter market, have combined to fuel speculation. NextWave was trading at $6.35 per share on Pink Sheets late Fri., up more than $1 for the week.
A license transfer would need FCC and Justice Dept. approval, sources agreed. A license transfer itself raises fewer issues than a license transfer in combination with customers and infrastructure.
“It’s very likely that Verizon and NextWave can come to an agreement, and it probably won’t have many regulatory problems,” said Scott Cleland, CEO of the Precursor Group, said during a lunch panel sponsored by Dow, Lohnes & Albertson and Communications Daily. “Relative to the spectrum that Cingular and AWE are going to get, it’s not off the charts. Cingular-AWE getting through does make NextWave-Verizon easier to see.” Cleland said the investment community would view the deal as “great” for NextWave and a “scratch” for Verizon given their size.
Richard Klugman, managing dir. at Jeffries & Co., said on the same panel that the deal is part of Verizon Wireless’s investment in wireless broadband. Klugman doesn’t expect resistance from regulators. “It doesn’t appear that the FCC is focused on that as a major concern right now,” he said. “One of the first things that Powell did when he became chairman was loosen the 45 MHz [spectrum cap] rule.”