WASHINGTON -- NextWave Telecom Inc. has tentatively agreed to sell dozens of highly coveted wireless-spectrum licenses to the nation's largest cellular telephone companies in a deal that could net NextWave as much as $11 billion and resolve a case that has bedeviled the government and the wireless industry for years, people familiar with the situation told The Wall Street Journal.
These people cautioned that the situation is fluid and that the final terms of the settlement hadn't been set on paper. Reached late Thursday night, officials from NextWave, of Hawthorne, N.Y., the purchasing companies and Federal Communications Commission spokesman David Fiske all declined to comment on the deal.
Still, people familiar with the matter said all the parties to the long-running and complicated dispute had tentatively agreed to a settlement.
People familiar with the negotiations said that under terms of the emerging settlement, NextWave would pay the government the $4.2 billion it owes for the licenses and perhaps several hundred million dollars of interest, while the government would drop its legal challenges to NextWave taking full possession of the spectrum. NextWave then would sell the licenses to Verizon Wireless and other companies that bought the rights to the spectrum at a January auction that later was annulled by a federal appeals court here.
Meanwhile, NextWave would receive the full amount of the companies' bids, or nearly $16 billion. Accounting for the money the company pays the government, the deal means that NextWave -- which is reorganizing under Chapter 11 of the U.S. Bankruptcy Code and triggered years of litigation by failing to meet its debt to the government -- could walk away with nearly $11 billion.
A settlement of that size would represent a huge windfall for NextWave, which is largely owned by its management, and investors such as Bay Harbour Management and Cerberus Partners. The size of the deal also would be sure to raise eyebrows in Washington, where the federal budget has been thinned by a slowing economy, new spending and tax cuts. Those budgetary woes are sure to worsen as the price tag mounts from last week's terrorist attacks and the ensuing American military response.
The agreement also would be a huge victory for many of the nation's largest wireless companies, which have long wanted to use NextWave's spectrum to bolster their existing networks and roll out advanced "third generation" services such as high-speed wireless Internet access. Though none of the companies would say so publicly, wireless industry executives privately argue that the impact of last week's attacks -- during which both survivors and victims used mobile phones to talk to loved ones and law-enforcement personnel -- strengthened the industry's case for gaining access to the licenses.
