WASHINGTON—XM Satellite Radio Holdings Inc. and WCS Wireless L.L.C. said they terminated an agreement that called for XM to buy WCS after the companies failed to secure government approval for the transaction.
The companies announced the agreement in July of last year. The deal called for XM to acquire privately held WCS for 5.5 million shares of its common stock, which valued the deal at nearly $200 million. Since then, XM’s stock price has plunged from the mid-$30 range to less than $16 per share as the company has battled increased subscriber acquisition costs and competition from Sirius Satellite Radio Inc.
“NAB is obviously pleased to learn that XM has dropped plans to buy WCS Wireless. We have long been concerned that the two satellite radio companies are circumventing their commitment to provide national service with local program initiatives. NAB continues to support legislation that would hold both XM and Sirius accountable to and in compliance with the FCC licenses they were granted,” said Dennis Wharton, a spokesman for the National Association of Broadcasters.
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WCS Wireless holds 10 megahertz of wireless spectrum in the 2.3 GHz band in 15 of the top 20 U.S. markets. The spectrum is adjacent to XM’s spectrum position. WCS said it now intends to pursue other alternatives for its spectrum licenses. A number of high-profile telecom companies also own 2.3 GHz spectrum, including AT&T Inc., BellSouth Corp., Verizon Communications Inc. and NextWave Telecom Inc.
XM had hoped to use the additional spectrum to expand its offerings to include video and data services.
“This is beaucoup spectrum for consolidation by current 2.3 GHz strategic placeholders or an opportunity for a new bandwidth player,” said Jim Wiesenberg, a wireless licensee and principal of Scottsdale, Ariz.-based spectrum advisory firm WW Associates.
Click here for complete list of WCS’ spectrum holdings across the country prepared by WW Associates.
Raymond James analyst Ric Prentiss said the FCC’s upcoming advanced wireless services auction could increase investor interest in WCS’ spectrum, which might drive up the buying price.
