Sprint to buy Wirefree's spectrum for $105M

Sprint Nextel (NYSE:S) disclosed in its recently quarterly filing that it will purchase 10 MHz of spectrum across 16 markets for a total of around $105 million. While the action appears to be a relatively minor housekeeping item for the nation's No. 3 carrier, it does again serve to highlight the importance--and value--of spectrum in the mobile market.

Sprint purchased the spectrum from Wirefree Partners III LLC, a company founded by former executives of AirGate PCS (a Sprint affiliate that was acquired by Alamosa Holdings, which itself was acquired by Sprint). Wirefree had net high bids of around $150 million for 16 licenses in the FCC's broadband PCS Auction 58, held in 2005, covering just over 18 million POPs. (Wirefree received small-business bidding discounts for most of the licenses.)

The licenses, which are in the 1900 MHz band, cover markets including Austin, Texas; Cincinnati, Ohio; Gallup, N.M.; Virginia Beach, Va.; and Seattle, Wash. Sprint's CDMA network runs in the 1900 MHz band.

Other major bidders in the FCC's Auction 58 included Verizon Wireless (NYSE:VZ) and Leap Wireless (NASDAQ:LEAP).

Shortly after the close of the FCC auction, Wirefree leased 5 MHz in each of its markets to Sprint, and used the remaining 5 MHz to build out its own wireless network targeting enterprises. According to filings with the FCC, Wirefree completed its buildout in 2008, but "Wirefree's business has not proved successful. While Wirefree's network remains in place, it has determined that running its own network is not sustainable in the long term."

In its filing with the Securities and Exchange Commission, Sprint said it expects the transaction, which includes financing, capital lease and other obligations totaling $105 million, to close in the fourth quarter of 2010. The company did not immediately respond to questions about the transaction, including what it plans to do with the spectrum.

For more:
- see Sprint's quarterly SEC filing

Related Articles:
Sprint gets back to positive subscriber growth in Q2
Sprint to buy iPCS for $831M
AT&T pays Sprint $59M in spectrum swap