(FT slant) - Qualcomm to invest $300m in NextWave Telecom
By Dan Roberts in New York
Published: August 16 2001 16:22GMT | Last Updated: August 16 2001 17:52GMT
Hopes of settling a damaging dispute over third generation mobile phone licences were hit on Thursday as NextWave, which claims ownership of vital US radio spectrum, announced a $300m investment from Qualcomm.
The support from such a large technology group may hamper attempts to wrestle the spectrum back from NextWave and delay services planned by other mobile operators such as Verizon Wireless.
NextWave filed for bankruptcy protection in 1998 after bidding for the spectrum and saw its licences re-auctioned by the Federal Communications Commission.
These licences were bought by a series of other operators including Verizon Wireless, a joint venture between Verizon and Vodafone of the UK, during a January auction which raised $17bn.
However, NextWave contested the FCC's right to reclaim its original spectrum and re-use it. In June, a Washington District Court ruled in the company's favour and said Nextwave still had rights over the spectrum despite its bankruptcy.
Since then, investors have flocked back to NextWave and at the beginning of August its announced plans to refinance the business with around $5bn of debt and equity funding.
Much of this was provided by a series of private equity firms but the identity of key industrial partners had remained secret until Thursday when Qualcomm revealed its new partership with NextWave.
Qualcomm, a San Diego-based designer of mobile phone chips, has become increasingly active in the industry by making investments in mobile operators who will help promote its preferred third generation standard, known as cdma2000. Allen Salmasi, chairman and chief executive of NextWave, said he hoped to launch services using the technology and disputed licences in several regional markets, including New York and Los Angeles, by December this year. Further launches will be completed by April of next year, he said.
NextWave's increasing financial strength is likely to make it harder to reclaim the licences for new bidders such as Verizon, although NextWave does still owe the FCC at least $4.3bn from its original purchase of the spectrum.
Last week Michael Powell, FCC chairman, said he would appeal the District Court decision in the Supreme Court. The FCC also points out that not all of the 422 licences auctioned in January were owned by NextWave and many regional markets are unaffected by the dispute.
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