Leap bidding status still uncertain
WASHINGTON, March 22 (Reuters) - Leap Wireless International Inc. (Nasdaq:LWIN - news) will be bidding in this week's U.S. wireless license auction but federal regulators could bounce it from the proceedings shortly thereafter.
The wireless telecommunications provider, spun off from Qualcomm Inc. (Nasdaq:QCOM - news) last year, is hoping to win licenses reserved mainly for new and small businesses at a Federal Communications Commission auction starting on Tuesday.
The problem is an option Qualcomm retained to purchase about 18 percent of Leap's stock.
Under FCC rules, the possible ownership stake by Qualcomm, with more than $3 billion in sales last year, could make San Diego, California-based Leap ineligible to bid for most of the licenses at the auction.
Leap officials on Monday declined to comment.
The FCC conditionally approved Leap as a bidder for so-called C-Block and F-Block licenses at Tuesday's auction. More than 95 percent of the 347 licenses being offered are in those two blocks.
FCC officials said Leap's qualification as a bidder could be revoked when the company's status as a small business is decided. That decision could take anywhere from a few weeks to a few months.
On March 5, Leap asked for 30 more days to amend its original qualification request made last year. The March 5 letter followed complaints from the U.S. Small Business Administration and other wireless carriers that Leap should not qualify for the new and small company licenses.
FCC officials on Monday said they had not received Leap's amended request yet.
The issue first arose in October, when Leap sought to acquire four wireless licenses for $20 million from Airgate Wireless LLC.
Airgate won the licenses, covering several cities in North and South Carolina, at a previous government auction reserved for new and small companies.
Under FCC rules, if the C-block licenses are transferred to a company that would not have qualified for the auction, the acquirer must pay a substantial penalty.
So Leap asked the FCC to qualify it as a ''very small business'' under the agency's rules. That would allow Leap and its Cricket Holdings subsidiary to buy the Airgate licenses without paying a penalty and also to participate in the upcoming auction.
The Small Business Administration and competitors objected, arguing that if Qualcomm exercised its option, Leap would not qualify. |
