NextWave to unload U.S. spectrum

Sale of 2.5 GHz, AWS and WCS licenses could command high prices. This time, there’s no bankruptcy involved.

NextWave plans to sell its U.S. wireless spectrum, ending all pretensions of becoming a mobile operator and allowing the carrier-turned-vendor to focus exclusively on its multi-faceted equipment and software businesses.

NextWave said today it has hired a pair of financial consultants, Deutsche Bank and UBS Investment Bank, to find a buyer for its 223 licenses divided among four different spectral bands. NextWave currently owns the 150 Advanced Wireless Services (WCS) licenses at 1.7 GHz and 2.1 GHz, covering 62 million people; owns 30 Wireless Communications Services (WCS) in the 2.3 GHz band, covering 209.8 million people; and either owns or leases 39 Educational Broadband Services (EBS) and Broadband Radio Services (BRS) licenses in the 2.3 GHz and 2.5 GHz bands, covering New York City.

“Since the completion of the recent 700 MHz auction, we have received multiple offers for our U.S. spectrum assets,” NextWave CEO and president Allen Salmasi said in a statement “Given our continued success in developing highly differentiated wireless broadband and multimedia-enabled products, we no longer view our spectrum holdings as critical to reaching our product sales objectives, and believe that now is the perfect time for us to sell these valuable assets while network operators are trying to finalize their band plans and spectrum holdings for their continuing 3G and planned 4G rollouts.”

NextWave didn’t say anything about selling its international assets, which are quite extensive, ranging from 3.5 GHz licenses in Eastern and Western Europe to broadband wireless spectrum in Canada and Argentina. But its U.S. holdings are by far by its largest assets and are likely to attract some substantial bidders considering the massive amounts paid for capacity in the recent 700 MHz and AWS auctions.

The EBS/BRS spectrum is the same being used by Clearwire and Sprint in their WiMAX rollouts, making either company a likely bidder for more capacity in the country’s largest and densest market. NextWave’s AWS licenses are in some of the country’s largest markets, which could attract the attention of Leap Wireless and MetroPCS. Both of those smaller operators are using AWS to expand their footprints. T-Mobile is also using AWS for its 3G network and may seek additional capacity in large cities. The WCS holdings are NextWave’s most extensive, covering two-thirds of the U.S. population, but they may prove to be the least valuable. The country’s largest WCS license holder, AT&T, hasn’t found an economical use for the difficult frequency band, launching several trials but no commercial service over the spectrum.

This certainly won’t be NextWave’s first blockbuster spectrum sale. In 1996, NextWave gained fame by outbidding all other operators for coveted PCS licenses in an FCC auction. That fame turned to notoriety as it NextWave subsequently filed for bankruptcy and engaged in a lengthy battle with the FCC over its right to keep or sell the licenses despite not having paid for them. NextWave eventually won out and sold the PCS licenses to Verizon Wireless, Cingular (now AT&T) and MetroPCS, using the proceeds to purchase its current portfolio of spectrum as well as several companies specializing in disparate technologies: Wi-Fi equipment maker Go Networks, video codec maker PacketVideo and Time Division-CDMA network vendor IPWireless. Those acquisitions weren’t even related to what it now considers its prime business: 4G technology.

NextWave has said that it planned to use its spectrum as incentive to existing operators and new market entrants to embrace its new technologies, leasing or selling it to operators if they deployed a NextWave-powered network. According to NextWave, however, that kind of seeding of the market is no longer necessary due to its recent momentum in the WiMAX and LTE arenas. NextWave has signed deals with Huawei and Alcatel-Lucent to incorporate its MXtv mobile TV technology into their WiMAX network equipment. NextWave has also managed to get itself inducted into a gang of influential global vendors in the LTE space.