AT&T Inc. has agreed to buy NextWave Wireless Inc. in a deal worth as much as $600 million in cash, giving it more airwaves to provide mobile Internet services.
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 a statement Thursday. In a separate deal with the once-bankrupt company’s lenders, AT&T will acquire NextWave’s debt, bringing the deal’s total value to $600 million.
Mobile phone carriers are racing to add more airwaves as they roll out new services and congestion grows on current networks. NextWave holds licenses for Wireless Communication Services, or WCS, which would start being used for mobile Internet access for the first time under a plan by AT&T and Sirius XM Radio Inc. The Federal Communications Commission is weighing the proposal, submitted in June.
“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,” AT&T said in the statement. The Sirius proposal “effectively creates much-needed new spectrum capacity.”
AT&T expects to complete the NextWave transaction by the end of the year, assuming it passes regulatory hurdles. If its Sirius proposal is approved, the company plans to start using WCS spectrum for fourth-generation wireless service in about three years. That could help support surging traffic on smartphones and tablets, AT&T said.