Friday, August 3, 2012

AT&T Inc.(NYSE:T) On a Shopping Bender For Spectrum

AT&T Inc.(NYSE:T) has been into a shopping extravaganza for wireless spectrum. It has reportedly struck three deals that can increase its capacity for wireless broadband.

The phone company based in Dallas said on Thursday that it has agreed to purchase spectrum from Miami-based Horizon Wi-Com and Comcast Corp., which is a cable company. The company did not disclose the amount it is paying. Comcast has given up on its plans to initiate a wireless network and is currently selling most of its spectrum to Verizon.

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UBS analyst, John Hodulik said that he predicts AT&T is paying a lesser amount than $1 billion for all the three deals. All the deals have involved spectrum in a single band. When operated together, all of them would offer near-nationwide coverage and a considerable boost to AT&T’s ability. The company revealed that it plans on deploying spectrum in the next three years.

Since the radio bands lie in close proximity to frequencies that are implemented for satellite communications, there have been interference concerns that have prevented them from being implemented. AT&T has talked to the Federal Communications Commission, asking for approval of a solution that could possible prevent interference. 

AT&T has been hunting for wireless spectrum and in the process it has agreed to purchase T-Mobile USA last year for an amount of $39 billion. The deal, however, went through an antitrust probe.

The investment of $600 million for NextWave includes $25 million for its shares and another $25 million if specific conditions are fulfilled. The deal does not cover NextWave’s spectrum. NextWave posted the value of its spectrum holdings at $434 million in a recent regulatory filing. The debt is around $1.1 billion.

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Based in San Diego, NextWave has gone through tough times. It was chucked out of Qualcomm Inc. in 1995. In the following year, it had placed a bid of $4.74 billion in order to purchase rights for spectrum licenses. It could not pay the amount and finally applied for bankruptcy.

Shares of AT&T Inc.(NYSE:T) are up 1% to $37.91.

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