Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Nextwave Telecom Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Jon Koplik who wrote (138)	8/15/1999 8:24:00 PM
From: Caxton Rhodes	Respond to of 1088

Nextwave is privately held and has shareholders. Caxton

To: Jon Koplik who wrote (138)	8/15/1999 8:37:00 PM
From: Caxton Rhodes	Read Replies (1) \| Respond to of 1088

NEXTEL GETS A SHOT AT PCS LICENSES RELATED QUOTES NXTL 54 1/4 1 1/8 QCOM 160 9 WCOM 78 11/16 2 9/16 Aug. 13, 1999 (LAND MOBILE RADIO NEWS, Vol. 53, No. 32 via COMTEX) -- Nextel Communications Inc. [NXTL] yesterday announced it now has the option to acquire the 1.9 GHz frequencies of PCS licensee NextWave Personal Communications LLC after the FCC and the Department of Justice approved the company's request. Operating under Chapter 11 status for the past 14 months and currently embroiled in bankruptcy proceedings, NextWave has approximately 30 MHz of spectrum in C-Block PCS licenses covering 63 basic trading areas (BTAs) as well as 32 BTAs in the D, E and F blocks. These licenses cover more than 165 million customers. While the approval doesn't guarantee NextWave's frequencies will go to Nextel, it is a strong possibility. Backed by the deep pockets of wireless entrepreneur Craig McCaw, Nextel might outbid other possible suitors. Approval from the FCC and the DoJ was necessary because Nextel already holds approximately 10 MHz of non-contiguous spectrum in the 800 MHz and 900 MHz SMR bands. However, NextWave issued a statement critical of Nextel's deals with the FCC and the DoJ and asked Nextel to release its plan for acquiring NextWave's licenses. The company was indignant that its business plan was still valid and will work in the marketplace. The U.S. Bankruptcy Court for the Southern District of New York has valued NextWave's licenses at $1 billion. The company claims its reorganization plan includes commitments of more than $750 million of new working capital. A confirmation hearing for the plan is scheduled for Sept.8. NextWave already has paid $474 million of the $1 billion it owes the FCC for the licenses. A confirmation hearing for the plan is scheduled for Sept.8. Strong Out Of The Gate NextWave made a big splash in the wireless market when it bid more than $4 billion for its C-block licenses in 1996. The company, created by former Qualcomm Inc. [QCOM] employees, hoped to use the spectral efficiencies of CDMA to create a high-capacity marketplace for resellers in major markets across the country. At one time, the company looked like MCI's entree into the wireless market. However, the large number of wireless entrants in top markets gave investors jitters, and the stock offering NextWave planned to pay for its massive spending spree never materialized. NextWave's financial problems began before the company completed any substantial system build outs, so Nextel is not obligated to use the frequencies for any one service. One possibility would be to build out NextWave's major market territories using 1900 MHz GSM equipment and use the emerging class of dual-mode iDEN/GSM handsets. But that isn't the only option. Another area Nextel might explore is third-generation data services. Indeed some kind of non- voice offering may be the only way to make the top C-block licenses economically viable. Given the huge head start of heavy hitters like Sprint PCS [PCS] and AT& T [T] in the country's top markets, it is difficult to see how anybody could justify the startup costs of one more voice competitor using NextWave's licenses. Nextel would not say how much it intends to bid for the frequencies or what it would use them for. But the general opinion right now is that additional spectrum would be used for the company's upcoming data network, set for commercial release in early 2000. While Nextel's voice coverage could use some improvement, analysts say, that could be handled through more extensive build outs, not more spectrum. It's Getting Better All The Time If Nextel buys the spectrum, this could be a " win/win," says Christopher Larsen, an analyst with New York-based Prudential Securities. " The FCC will probably get a better price than they would get in the bankruptcy courts. For the creditors, it's an easy way to sell out, " Larsen explains. Plus, with Nextel already active in nearly all of the major markets, it would prevent the addition of another carrier, something nobody wants. " It would be great to not have the spectrum in another player's hands," Larsen says. Certainly other companies will be interested in getting a piece of the pie, says Bradley Williams, an analyst with Legg Mason Wood Walker. But most other carriers could be hindered by spectrum caps that Nextel doesn't face. Although buying the frequencies would add to Nextel's $10 billion of debt in the short term, the action could potentially boost the company's valuation in the long term, thereby raising the chances of Nextel's acquisition by a large company. " This could be a significant increase [in Nextel's spectrum holdings], and it makes the company look more attractive [financially]," Williams says. " But this just gives them the right to do it. If it gets the licenses, it could offer a cadre of services." Talks to merge with MCI WorldCom Inc. [WCOM] broke off last spring after both companies balked on a selling price. MCI WorldCom, which has been desperately seeking a wireless business, may not be interested in NextWave's licenses because the Jackson, Miss.-based long-distance provider probably would rather assume a functioning business than try to get one off the ground. If Nextel does not buy NextWave's licenses and the company actually does sell them, this could be a perfect opportunity for a foreign investor, such as Deutsche Telecom, to enter the U.S. market. Nextel's stock midday Friday was trading at $53.31, up from Wednesday's closing price of $48. (Christopher Larsen, Prudential Securities, 212/778-1023; Kara Palamaras, Nextel, 703/4334579; Bradley Williams, Legg Mason Wood Walker, 410/454-4540.)