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Cingular snaps up NextWave licenses

The second-largest U.S. cellular service provider agrees to buy the bankrupt company's wireless spectrum licenses for $1.4 billion in cash, gaining entry to key urban markets.

Cingular Wireless, the second-largest cellular service provider in the United States, has agreed to buy wireless spectrum licenses in 34 markets from bankrupt rival NextWave for $1.4 billion in cash.

The deal was first revealed last week when NextWave's public relations firm, Hill & Knowlton, mistakenly issued a press release before the pact was officially completed. The firm said the premature release was the result of a clerical error.

Cingular representatives said that the deal, announced Tuesday, includes licenses for lucrative U.S. urban markets--including Boston, Chicago, Los Angeles, San Francisco and Washington--and represents 83 million potential new customers. The agreement lands Cingular spectrum for the most part in markets where the Atlanta-based company, a joint venture of BellSouth and SBC Communications, has existing voice and data operations.

Approval of the transaction remains subject to approval by the Federal Communications Commission (FCC) and by the bankruptcy court overseeing New York-based NextWave's reorganization.

"This spectrum will allow us more room to provide additional services and products, to expand coverage in some of our key markets and to better accommodate overall growth," Mark Feidler, chief operating officer for Cingular, said in a statement.

Experts seemed unsurprised by the deal, but lauded Cingular for adding spectrum in attractive markets such as San Francisco. Tole Hart, a principal analyst at Gartner, said the new capacity would likely go toward development of W-CDMA (Wideband Code Division Multiple Access) bandwidth. He also said he believed Cingular would continue to add spectrum when the FCC holds auctions next year.

"Cingular still needs to expand to other markets, but this is a good step forward," said Hart. "It's in the same ballpark as Verizon's $700 million spectrum deal in New York."