AT&T bolsters mobile Internet service with purchase of NextWave Wireless Inc.
San Francisco, CA, United States (4E) – Telecommunications company AT&T acquired NextWave Wireless Inc. for $600 million in cash. The deal expects AT&T to improve its mobile Internet service. The amount reached $600 million because AT&T also took on NextWave’s debt of $550 million.
“Under the agreement, AT&T will pay about $25 million to shareholders of San Diego-based NextWave, plus a contingent payment of an additional $25 million,” according to Bloomberg News.
NextWave is a welcome addition since it will add more airwaves to an already established network carrier like AT&T. Its acquisition by AT&T transfers Wireless Communication Services to the telecommunication company. Sirius (SIRI) XM Radio Inc and AT&T have also agreed to a plan to offer mobile Internet access to its users.
“WCS spectrum was first auctioned in 1997, but has not been utilized for mobile Internet usage due to technical rules designed to avoid possible interference to satellite radio users in adjacent spectrum bands. The Sirius proposal effectively creates much- needed new spectrum capacity,” AT&T stated, according to Bloomberg News.
The transaction expects to be completed before the end of the year after AT&T finishes submitting regulatory requirements. Once the Sirius plan is confirmed, AT&T could be offering 4G wireless service by 2015.
“By buying NextWave, AT&T eliminates the biggest possible source of opposition to its joint proposal with Sirius. It’s a fascinating – and kind of brilliant – maneuver: AT&T is buying spectrum it can’t possible use for 4G, but in doing so AT&T could then turn its own worthless WCS spectrum into highly valuable 4G airwaves,” Gigaom stated.
AT&T’s share price has risen by 24 percent this year.