NextWave, From Spectrum to Hard Technology (WAVE)

NextWave Wireless Inc. (NASDAQ: WAVE) may be unloading its held spectrum assets to focus on core technology offerings.  Last night it announced that it has retained Deutsche Bank and UBS Investment Bank to explore the sale of "its extensive spectrum holdings in the United States."

The company noted that its spectrum footprint covers over 251 million people (pops) in the U.S. and includes major markets such as New York, Los Angeles, Chicago, San Francisco, Boston, Philadelphia, Denver, Houston, and Detroit. It also includes licenses and lease rights for a total of 4.7 billion MHz/pops of spectrum comprised of the following:

• 154 Advanced Wireless Service licenses in the 1.7/2.1 GHz band,
• 30 Wireless Communication Service licenses in the 2.3 GHz band,
• and 39 Educational Broadband Service and Broadband Radio Service licenses and spectrum leases in the 2.5 GHz band.

The company said it has received multiple offers for its U.S. spectrum assets and this will allow it to strengthen the books, retire debt, and continue the commercialization of wireless broadband and multimedia solutions.

The products it wants to introduce are high-performance WiMAX and RFIC chipsets, advanced multi-mode, multi-band TD-CDMA, WiMAX and LTE enabled base station platforms, breakthrough MXtvTM and TDtvTM mobile television systems, mobile multimedia software solutions and platforms.

The last year has been tough for NextWave Wireless as shares closed at $4.75 yesterday, with a 52-week high of $10.44.  After a brief look, the books are already in decent shape and that would signal the bulk of the funds would go toward commercializing their products rather than trying to own airwaves. 

As its revenues are still minuscule this might actually work.  Its market cap is $440 million and 2007 revenues were a low $59.1 million.  The one analyst that follows it sees revenues to be some $123 million this year and $224 million next year, although we wouldn’t rely on that at all as it is one analyst.

But a spectrum sale also assumes their products are ready to go, are top notch, are well received, and that its already-signed partnerships come to rapid fruition.  If not, then its just another technology company fighting in a crowded space.

Jon C. Ogg
April 24, 2008