NextWave acquires IPWireless in $100M deal

NextWave Wireless Inc. announced it will purchase TD-CDMA supplier IPWireless Inc. for $25 million in cash and $75 million in stock. The ultimate purchase price could increase to $235 million by 2010 if IPWireless manages to achieve “certain revenue milestones,” although NextWave did not provide specifics.
“IPWireless and NextWave will work together to expand IPWireless’ product portfolio to incorporate WiMAX and/or Wi-Fi technologies for those service providers and equipment vendors that require such solutions,” said Allen Salmasi, chairman and CEO of NextWave. “IPWireless’ excellent global track record, including their successful introduction and commercialization of TD-CDMA technology, their development of several industry-first wireless broadband technologies, and their recent introduction of TDtv clearly demonstrate their strong capacity for technical innovation and the clear value they will bring to NextWave.”
NextWave, traded under the ticker symbol “WAVE,” watched its shares rise slightly after the news to around $9.70 per share.
Privately held IPWireless, based in San Bruno, Calif., boasts that its network offerings have been deployed commercially in more than a dozen countries, including the Czech Republic, New Zealand, Germany, South Africa, Sweden and the United Kingdom. Perhaps most notably, the company’s TD-CDMA network technology was selected by New York City to form the basis of a citywide network for public safety. The five-year deal is valued at $500 million.
IPWireless also offers a mobile TV technology that runs inside third-generation cellular networks. The company’s TDtv product, based on the Multimedia Broadcast Multicast Service standard, has not been rolled out by any carrier, but has been tested in Europe.
The acquisition is especially notable for NextWave, which has a long and sordid history in the wireless industry. The company bid for PCS spectrum in the 1990s, but eventually went bankrupt due to the cost of the spectrum. The company’s spectrum licenses were held up in courts for years, and the issue managed to wind its way to the Supreme Court. NextWave eventually sold off its spectrum licenses, and has been using the proceeds from that sale to fund its new efforts in the wireless industry.
Flying under the radar for the past several years, yet still headed by Salmasi, NextWave has become involved in a number of businesses. The company sells WiMAX chipsets through its NextWave Broadband subsidiary, and has gotten into the deployment of Wi-Fi networks through the $13.3 million acquisition of Go Networks. The company is also involved in the delivery of mobile video to cellphones through the acquisition of PacketVideo.
And despite its past troubles with spectrum ownership, NextWave continues to chase after airwaves. The company won $115.5 million of spectrum in the Federal Communications Commission’s advance wireless services spectrum auction last year, and now commands spectrum in the 1.7/2.1 GHz AWS band, the 2.3 GHz WCS band and the 2.5 GHz BRS/EBS band. The company owns spectrum covering 247 million Americans in most of the country’s major markets.
Now, due to its various businesses and spectrum licenses, NextWave is billing itself as “a global provider of mobile broadband products and technologies to enable Wireless 2.0, the next generation of mobile communications.”