UPDATE - Cingular, NextWave talk airwaves deal-sources
biz.yahoo.com
Reuters
Tuesday May 27, 3:39 pm ET
(Adds source on terms, details, background)
WASHINGTON, May 27 (Reuters) - Cingular Wireless, the No. 2
U.S. wireless telephone carrier, is in talks to acquire roughly 20
percent of the wireless airwaves held by NextWave Telecom Inc.
(Other OTC:NXLC.PK - News), people familiar with the situation
said on Tuesday.
Cingular would potentially
pay approximately $1.5
billion in cash for the
licenses, according to one
source close to the talks.
The two sides were still
negotiating and a second
source said the deal would
not include airwaves for the
lucrative New York City
market.
NextWave, which is in
bankruptcy protection and recently won a long court battle to
keep the wireless licenses, would maintain a national footprint but
would provide Cingular a slice of airwaves, the source said.
Michael Wack, deputy general counsel for NextWave, declined to
comment. Cingular Wireless, a joint venture between BellSouth
Corp. (NYSE:BLS - News) and SBC Communications Inc.
(NYSE:SBC - News), was not immediately available for
comment.
BellSouth was not immediately available for comment and SBC
declined to comment.
Cingular, the No. 2 wireless carrier behind Verizon Wireless,
posted slightly higher revenues in the first quarter as it added
customers after two straight quarters of losses. It added 189,000
customers in the first quarter and has more than 22 million
subscribers.
Cingular has suffered more than most of its national rivals as it
failed to keep up with competitive pricing plans and lost
customers. It recently changed its advertising to focus on its
network coverage, reliability and customer service.
It also adjusted its pricing plans to add regional calling plans,
rather than just one-size-fits-all national rate plans.
Cingular's problems have been compounded by overall
weakness in the U.S. wireless industry, which has been hit by a
slowdown in customer growth in the lagging economy.
Competition also has intensified as it becomes more difficult to
add new customers now that half the U.S. population already
owns cell phones.
The Federal Communications Commission tried to repossess the
airwaves from NextWave three years ago after the Hawthorne,
N.Y.-based company entered bankruptcy protection and failed to
pay for the licenses on time.
While fighting NextWave in court, the agency attempted to resell
them to carriers like Cingular and Verizon Wireless but earlier
this year the Supreme Court ruled the FCC was wrong to take
the licenses back.
Before the high court ruled, the FCC, NextWave and the carriers
tried to broker a deal in which NextWave would have given up
the licenses in exchange for almost $6 billion but that fell apart
when Congress refused to approve the deal. (With additional
reporting by Jessica Hall and Tom Johnson) |
