LEAP WIRELESS FINISHES GOVERMENT AUCTIONS 5TH WITH 36 WINNING BIDS.
Thursday April 15, 9:30 pm Eastern Time
U.S. wireless telecom auction nets $412.8 million
By Aaron Pressman
WASHINGTON, April 15 (Reuters) - The Federal Communications Commission on Thursday completed an auction of wireless telephone service licenses with bids totaling $412.8 million -- far less than the nearly $4 billion the same rights brought in earlier auctions.
But the companies that won the 347 licenses in earlier auctions found they had overpaid and were unable to raise money to pay for their bids.
The FCC conducted the new auction ending Thursday for returned licenses to offer ''Personal Communications Service'' wireless telephone service in different markets around the country. Almost all of the re-auctioned licenses for sale were reserved for small and start-up companies.
Cook Inlet, an affiliate of Western Wireless Corp. (Nasdaq:WWCA - news), won the two most valuable licenses in the auction.
The company agreed to pay $117.8 million for a Chicago license and $62.4 million for a Dallas license. Overall, Cook Inlet won 28 licenses for a total of $192 million -- the most of any winning bidder.
Viper Wireless Inc, with backing from a privately-held affiliate of AT&T Corp. (NYSE:T - news), won a New Orleans license for $18 million and a San Juan, Puerto Rico, license for $13.1 million. The company was the third-leading bidder with six winning bids totaling $32.3 million.
OPCS Three LLC, a venture of Omnipoint Corp. (Nasdaq:OMPT - news), won licenses for St. Louis for $14.6 million and Detroit for $13.2 million. The company was the second-leading bidder, winning 34 licenses for $45.1 million.
The company with the fourth highest winning bid value and also winning the most individual licenses was another company connected to AT&T called ABC Wireless LLC.
ABC won 64 licenses, including Las Vegas, Nevada, Kokomo, Indiana and Visalia, California, for a total of $30.2 million.
Leap Wireless International Inc. (Nasdaq:LWIN - news), which was spun off from Qualcomm Inc. (Nasdaq:QCOM - news) last year, was the fifth leading bidder with 36 winning bids totaling $18.7 million.
But the company's eligibility to participate in the auction is still being decided by the FCC. Qualcomm retained an option to buy part of Leap, which could violate the FCC's rules reserving the auction for small and start-up companies.
In the latest auction, the FCC made a key change in the rules for paying for winning bids following the financial disasters of an earlier PCS auction.
In a 1996 auction, the agency had allowed companies to pay for their bids in 10-year installments. The largest bidders in the 1996 auction have all declared bankruptcy.
The new auction plan scrapped the installment payment option.
Of the 347 licenses put up for bid, 45 received no bids.
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Leap Wireless International Inc (Nasdaq:LWIN - news)
Omnipoint Corp (Nasdaq:OMPT - news)
Qualcomm Inc (Nasdaq:QCOM - news)
Western Wireless Corp (Nasdaq:WWCA - news)
Related News Categories: options, telecom, US Market News
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