Subject: [NEXTEL-1] Cingular to Buy 20 Percent of NextWave's Spectrum, Reports Say

From: [email-masked]
Date: Wed, 28 May 2003 14:09:34 -0400

Cingular to Buy 20 Percent of NextWave's Spectrum, Reports Say

Cingular Wireless is close to closing a deal to buy about 20 percent of the
spectrum owned by NextWave Telecom, sources said yesterday. The deal could
include spectrum in Boston, Los Angeles and Washington, where Cingular needs
to bolster its service, sources said. According to the sources, the deal does
not include NextWave's spectrum licenses in New York City. Analysts valued the
deal at between $1.3 billion and $1.5 billion. NextWave and Cingular declined
comment on the reports.

==============================================================

Cingular, NextWave Talk Airwaves
Deal-Sources

Tue May 27, 2003 03:40 PM ET

WASHINGTON (Reuters) - Cingular Wireless, the
No. 2 U.S. wireless telephone carrier, is in talks to
acquire roughly 20 percent of the wireless airwaves
held by NextWave Telecom Inc. NXLC.PK , people
familiar with the situation said on Tuesday.

Cingular would potentially pay approximately $1.5
billion in cash for the licenses, according to one
source close to the talks. The two sides were still
negotiating and a second source said the deal
would not include airwaves for the lucrative New
York City market.

NextWave, which is in bankruptcy protection and
recently won a long court battle to keep the
wireless licenses, would maintain a national
footprint but would provide Cingular a slice of
airwaves, the source said.

Michael Wack, deputy general counsel for
NextWave, declined to comment. Cingular
Wireless, a joint venture between BellSouth Corp.
BLS.N and SBC Communications Inc. SBC.N ,
was not immediately available for comment.

BellSouth was not immediately available for comment and SBC declined to
comment.

Cingular, the No. 2 wireless carrier behind Verizon Wireless, posted slightly
higher
revenues in the first quarter as it added customers after two straight
quarters of
losses. It added 189,000 customers in the first quarter and has more than 22
million subscribers.

Cingular has suffered more than most of its national rivals as it failed to
keep up
with competitive pricing plans and lost customers. It recently changed its
advertising to focus on its network coverage, reliability and customer
service.

It also adjusted its pricing plans to add regional calling plans, rather than
just one-size-fits-all national
rate plans.

Cingular's problems have been compounded by overall weakness in the U.S.
wireless industry, which
has been hit by a slowdown in customer growth in the lagging economy.
Competition also has intensified
as it becomes more difficult to add new customers now that half the U.S.
population already owns cell
phones.

The Federal Communications Commission tried to repossess the airwaves from
NextWave three years
ago after the Hawthorne, N.Y.-based company entered bankruptcy protection and
failed to pay for the
licenses on time.

While fighting NextWave in court, the agency attempted to resell them to
carriers like Cingular and Verizon
Wireless but earlier this year the Supreme Court ruled the FCC was wrong to
take the licenses back.

Before the high court ruled, the FCC, NextWave and the carriers tried to
broker a deal in which NextWave
would have given up the licenses in exchange for almost $6 billion but that
fell apart when Congress
refused to approve the deal. (With additional reporting by Jessica Hall and
Tom Johnson)

http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=2829155
=============================================================================
TELECOMMUNICATIONS

Cingular Wireless Nears Deal
For Licenses From NextWave

By JESSE DRUCKER and ROBERT FRANK
Staff Reporters of THE WALL STREET JOURNAL

Cingular Wireless, the country's second-biggest
cellphone carrier, is close to a roughly $1.5 billion
spectrum license deal with NextWave Telecom Inc.,
according to people familiar with the situation.

The spectrum licenses from NextWave, which is
operating under bankruptcy-court protection, could
help turn around fortunes at Cingular, a joint venture
of SBC Communications Inc. and BellSouth Corp.
They could let the carrier offer broader service
without additional roaming charges. CNBC reported
the potential deal Tuesday afternoon.

Cingular, which has 22.1 million subscribers, second
to Verizon Wireless's 33.3 million subscribers, has
struggled of late. Last year it became the first major
wireless provider to lose net customers for two
straight quarters, and it reported weak customer
growth in the first quarter of this year.

The carrier's lack of a true national footprint has
made it expensive to offer national,
no-roaming-charge calling plans. In markets where
Cingular doesn't own spectrum licenses, customers
from outside the region either pay roaming charges
or Cingular eats the roaming charges it pays to its
partners, such as AT&T Wireless Services Inc.

It appears the licenses in the deal would be mostly in
markets where Cingular already has spectrum,
according to one of the people familiar with the
transaction. The deal would be subject to approval
by the bankruptcy court.

Cingular does not own the license to spectrum it uses
in New York City, but instead shares spectrum
licensed by Deutsche Telekom AG's T-Mobile USA
Inc. there. The deal with NextWave wouldn't include
New York, according to a person familiar with the
situation.

Representatives for Cingular and NextWave
declined to comment.

NextWave successfully bid on nearly $5 billion in
spectrum licenses in 1996 but filed for Chapter 11
bankruptcy protection two years later. The Federal
Communications Commission repossessed the
licenses and reauctioned them, but several wireless
carriers that then successfully bid on the licenses
were put into limbo after NextWave successfully
sued the FCC. Earlier this year, the Supreme Court
ruled that the FCC improperly reclaimed the
licenses, effectively putting the licenses back under
NextWave's control.

It isn't clear whether other companies also are bidding on the NextWave
licenses.

http://online.wsj.com/article_email/0,,SB105406702936228100,00.html?

=================================================================================

May 28, 2003

$1.3 Billion Deal Seen for NextWave Radio Spectrum

By SIMON ROMERO

NextWave Telecom is nearing an agreement to sell nearly a fifth of its radio
spectrum licenses to one of the nation's largest wireless carriers, Cingular
Wireless, in a deal that would allow NextWave to start paying off some of its
billions of dollars of debt, executives involved in the transaction said
yesterday.

The deal, described as imminent by one of those executives, would transfer
roughly 20 percent of NextWave's spectrum licenses to Cingular for $1.3
billion to $1.5 billion in cash.

Cingular, the third-largest wireless carrier in revenue after Verizon Wireless
and AT&T Wireless, needs additional spectrum to fill gaps in its nationwide
network. Still, the deal between NextWave and Cingular does not involve
spectrum licenses for New York City, where Cingular needs access to more
airwaves to transmit calls, executives involved in the talks said.
The negotiations between NextWave and Cingular began after the Supreme Court
ruled in January that the Federal Communications Commission had no right to
seize NextWave's spectrum licenses and resell them after the company filed for
bankruptcy protection in 1998. In 2001, the F.C.C. reauctioned the spectrum
licenses that it had confiscated from NextWave for $16 billion. But by late
last year, with the legal dispute in the courts and slower subscriber growth
in the wireless market, Verizon, Cingular and other purchasers of the licenses
requested and got their money back from the F.C.C.

Michael Wack, a lawyer representing NextWave, declined to comment yesterday,
as did Selim Bingol, a spokesman for SBC Communications and Jeff Battcher, a
spokesman for BellSouth. SBC and BellSouth are the two owners of Cingular,
which is based in Atlanta. Jennifer Bowcock, a spokeswoman for Cingular, also
declined to comment.

NextWave's spectrum is now worth substantially less than it was at the time of
the 2001 auction. Analysts currently value NextWave's spectrum licenses at
$6.45 billion to $7 billion.

A deal for Cingular to buy a portion of NextWave's licenses would come after
the F.C.C. took steps earlier this month to dismantle barriers for leasing and
trading radio spectrum licenses, a move that will allow large carriers to get
access to the airwaves they need to improve service quality. The decision by
the F.C.C. will allow NextWave to lease its spectrum licenses and may explain
why the company is not selling its coveted New York spectrum, analysts said.

"NextWave could be trying to create more interest in its most valuable
properties," said Craig Mallitz, a wireless industry analyst at Legg Mason.

Depending on the final price agreed upon by the two companies, Cingular could
end up paying a bit more for the radio licenses it is acquiring from NextWave
than the amounts competitors have paid recently for spectrum based on
comparable local population numbers. Last December, Verizon Wireless agreed to
buy spectrum in cities including New York, Boston and Minneapolis from
Northcoast Communications for $750 million.

In that deal, Verizon paid about $1.60 a potential subscriber for the
licenses. If Cingular pays $1.5 billion for 20 percent of NextWave's licenses,
it would be paying about $1.86 a potential subscriber, a rate that would value
all of NextWave's spectrum at approximately $7 billion, according to Mr.
Mallitz.

By any measure, NextWave needs to sell or lease some of its spectrum if it
intends to pay its debts and exit bankruptcy. The company paid the federal
government only about $500 million of the $4.7 billion it agreed to pay for
its spectrum licenses when it bought them in 1996. Since then, NextWave has
not generated any profit.

The brainchild of Allen B. Salmasi, a former top executive at Qualcomm,
NextWave, which is based in Hawthorne, N.Y., recently reaffirmed its intent to
build a nationwide wireless network to transmit data for companies, a plan it
hopes will allow it to compete better in an industry crowded with
well-financed companies.

But whether NextWave will pursue this strategy when it has the opportunity to
sell or lease more of its spectrum licenses remains to be seen. Under the new
rules approved by the F.C.C. earlier this month, a license owner who is not
using spectrum will be able to lease it to another company and potentially use
those lease revenues to help it build up its own network infrastructure.

http://www.nytimes.com/2003/05/28/technology/28TELE.html?pagewanted=print&position=

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