NextWave Purchases IPWireless

By Eric Griffith

April 10, 2007

The two plan to bring WiMax and Wi-Fi to the IPWireless portfolio of backhaul products.

NextWave Wireless has purchased IPWireless of San Bruno, California for $100 million US ($25 million cash plus $75 million in NextWave common stock), with as much as $135 million more to be paid based on revenue milestones over the next two years.

IPWireless took on WiMax with 3G-based backhaul technologies, specifically 3GPP TDD Universal Mobile Telecommunications Systems/TD-CDMA. It is in trials with many mobile providers in Europe, including Orange, Vodafone, Telefonica and 3UK. Its equipment is also being used by New York City's Department of IT and Telecommunications in a five-year trial of a public safety wireless network. IPWireless will become a wholly-owned subsidiary of NextWave.

"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 Wireless, in a statement.

Earlier this year, NextWave shelled out $13.3 million to buy Go Networks, putting the WiMax equipment maker in the Wi-Fi world. The company also owns wireless spectrum in the US -- in September of 2006, it purchased 154 licenses for a total of $115.5 million, covering markets like Pittsburgh, Puerto Rico, Indianapolis, Sacramento, New Orleans, Tulsa, Little Rock, El Paso, Albany, Louisville, Sarasota, Anchorage and Fort Myers. It also owns nationwide spectrum in Germany.

It's a nice turnaround for a company that was in bankruptcy in early 2005 after it couldn't pay for some frequencies purchased at an earlier auction.

Consulting firm Ovum's EuroView Daily Comment service, written by Julien Grivolas, says of the buy-out that while IPWireless has a "fully proven mature solution," it doesn't have enough customers and is likely betting the farm on being used by Sprint Nextel -- which ultimately went with WiMax for its 2.5GHz spectrum in the US. Sprint was, in fact, an investor in IPWireless. They compare this buy to when Qualcomm bought out Flarion, but note that the price was not even close (Qualcomm shelled out $600 million in August 2005).

Just last week, Frost & Sullivan gave IPWireless its 2007 Frost & Sullivan Technology Innovation of the Year Award for "development of a pioneering mobile TV/multimedia solution," the TDtv tech, which is also based on TD-CDMA.

Of course, the deal is subject to approval by various bodies, but it's expected to close before the end of June.

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