Ruling gives firm control of wireless licenses

By Greg Stohr
Bloomberg News Service

WASHINGTON — NextWave Telecom Inc. has won a U.S. Supreme Court ruling that prevents regulators from stripping the bankrupt company of 90 wireless licenses worth an estimated $6.5 billion.

The decision gives NextWave access to the 10 largest U.S. markets, including New York and Los Angeles, and 172 million potential customers. It ends a Federal Communications Commission effort to seize the licenses after NextWave missed a payment deadline and filed for bankruptcy in 1998.

NextWave can either build its own network or sell some of the airwaves to larger rivals. Verizon Wireless Inc., AT&T Wireless Services Inc. and Cingular Wireless all have sought the airwaves in the past and may bid again so they can increase and improve service in the largest markets, analysts said.

"Virtually all of the major players would want some additional spectrum," said Rick Franklin, analyst at Banc of America Capital Management Inc., which oversees $260 billion and is "not actively buying" shares of wireless companies.

The 8-1 ruling is a victory for NextWave's creditors, including Qualcomm Inc., UBS Warburg LLC and Sony Corp. Under NextWave's reorganization plan, UBS Warburg has made a $2.5 billion loan commitment, and Qualcomm will invest $300 million. The creditors hired their own attorney to argue for NextWave at the Supreme Court.

NextWave shares surged 50 cents, or 21 percent, to $2.80 at 4 p.m. in over-the-counter trading.

"We are extremely pleased with the decision because it clears the way for us to move forward and complete our reorganization," NextWave Chairman Allen Salmasi said in a statement.

The court said NextWave's bankruptcy reorganization shielded the company from the FCC's efforts. Justice Antonin Scalia, writing for the court, said the revocation "is not in accordance with law."

The court said regulators must wait in line for payment with other NextWave bankruptcy creditors. NextWave says it now intends to pay the full amount of its bid.

A ruling against NextWave might have extended the legal fight two more years because the company could have made additional arguments for keeping the airwaves at a lower court.

"Finally, this Gordian legal knot has been cut," said Tom Wheeler, president of the Cellular Telecommunications & Internet Association. "This valuable spectrum, tied up in the courts and thus left fallow for far too long, can now be put to use delivering wireless service to America's consumers."