WASHINGTON-Nextel Communications Inc., desperately seeking spectrum, came out of nowhere to win the auction of bankrupt WorldCom Inc.’s wireless assets with a $144 million bid, more than doubling the original offer by BellSouth Corp. last month.
The results of last week’s auction were disclosed in a June 30 filing by WorldCom with the U.S. Bankruptcy Court for the Southern District of New York in Manhattan. Before the auction, insiders believed competition for WorldCom’s wireless assets would come largely from local and long-distance telephone companies that need wireless Internet solutions for rural areas. Nextel was not even mentioned as a possible bidder.
Nextel’s spectrum coup comes as its dogged campaign to obtain additional frequencies through a plan to remedy 800 MHz public-safety interference appears to be losing ground and faces increased hostility from competing mobile-phone carriers.
A hearing is set for July 8, at which time U.S. Judge Arthur Gonzalez, who presides over the WorldCom bankruptcy, will consider final approval to name Nextel as the high bidder for WorldCom’s wireless assets. Parties must file objections with the court by Thursday.
The transfer of WorldCom’s fixed wireless licenses to Nextel is subject to approval by the Federal Communications Commission.
BellSouth Corp., which in May offered $65 million for WorldCom’s fixed wireless properties, will be paid a $1.43 million break-up fee.
“Nextel has made it its practice to seek addition spectrum at affordable prices with a mind to provide additional flexibility [on frequencies],” said Audrey Schaeffer, a Nextel spokeswoman.
In addition to the fixed-wireless licenses, which comprise about 200 megahertz and can be deployed for mobile communications under spectrum flexibility rules, Schaeffer said Nextel is acquiring 19 antenna sites and various tower leases.
WorldCom and Nextel are not strangers. Before succumbing to an $11 billion accounting scandal that has brought the Jackson, Miss., long-distance giant to its knees and put its lucrative government contracts in jeopardy, WorldCom in 1999 considered purchasing Nextel because it-unlike other top telecom carriers-lacked a major wireless play. WorldCom, however, ultimately decided not to buy Nextel.
“Nextel has always been one of the savviest buyers of disparate spectrum,” said Jim Wiesenberg, managing director of Carmichael & Co. L.L.C., a merchant banking firm with offices in New York and Phoenix.
Nextel became a national wireless powerhouse by combining slices of spectrum bought from dispatch radio operators around the country and building digital networks that enable the carrier to provide a mix of cellular, walkie-talkie and data messaging services.
Now other cellular operators, like No. 1 Verizon Wireless, are scrambling to add a push-to-speak feature to their wireless networks.
“WCA welcomes Nextel into the industry and its efforts to unlock the value of spectrum going forward,” said Andrew Kreig, president of the Wireless Communications Association International.
WCA, which represents fixed wireless firms, is lobbying to get the FCC to reconfigure 2 GHz frequency bands-originally allocated for wireless video service-to enable high-speed, broadband wireless Internet connections.
