NextWave originally won 95 licenses to offer Personal Communications Services networks in more than 90 US cities, in an auction back in 1996. The purchase price was more than $4.7 billion and the company had planned to build a nationwide mobile phone network.
However, NextWave quickly got into major financial difficulties trying to foot the bill, and in 1998 was forced into chapter 11, claiming that the FCC’s unfavorable financial and regulatory conditions had caused its troubles.
The FCC then rescinded the licenses as NextWave had only paid a $500 million deposit for the spectrum and not the full $4.7 billion, but after a protracted legal battle, NextWave regained control of the licenses.
Now, Verizon Wireless says it will buy all of NextWave’s PCS spectrum licenses for the cost of $3 billion. The 10 and 20 megahertz licenses are in the valuable 1.9 gigahertz PCS frequency range, and cover a population of 73 million people. The company will use the licenses to expand its network capacity in 22 existing markets, including New York, Boston, Washington DC, and Los Angeles, as well as to expand Verizon’s footprint into Tulsa, Oklahoma.
The licenses will be acquired through the purchase of Hawthorne, New York-based NextWave following the completion of its bankruptcy reorganization, after which the licenses will be its only assets. The deal is expected to close by mid-2005 and is subject to approval by the US Bankruptcy Court and the FCC as well as US regulatory officials.
Verizon had started negotiations following an agreement between the US government and NextWave earlier this year that freed up the wireless spectrum licenses that have been locked up in court battles since it declared bankruptcy in 1998.
In July this year, Verizon Wireless won the spectrum license for the New York metropolitan area auctioned by NextWave. Under terms of the deal, Verizon Wireless paid $930 million for the license. The 10 MHz license is in the 1.9 GHz PCS frequency range and covers a population of 20.1 million people in New York City and northern and central New Jersey, as well as Westchester and Rockland counties.
Earlier in July, Verizon Wireless also paid $418 million for the wireless assets of Qwest Communications International Inc. That deal added spectrum in 62 markets, in 14 western and mid-western states, including cities such as Denver, Phoenix, Seattle, and Salt Lake City.
