The battle for wireless cable spectrum heated up again last
week with Sprint Corp.'s agreement to buy American Telecasting Inc., a Colorado
Springs, Colo.-based wireless cable television provider, for $448.8 million in cash and
assumed debt.
This was the second wireless cable deal by Sprint in a
month, and it came on the heels of MCI WorldCom's purchase of CAI Wireless Systems
Inc., an Albany, N.Y.-based wireless cable company.
In closing that deal, MCI upped its purchase price to $28
per share from $24 as an offer arose from a competing bidder, most likely Sprint. At that
price, CAI would be worth about $476 million.
Sprint fired the first shot in the fight for wireless
spectrum with its announcement that it would purchase People's Choice TV Corp. (PCTV)
of Shelton, Conn., for $103 million, or $8 per share. Sprint earlier bought preferred
stock and warrants representing about 20 percent equity in PCTV for $23.3 million.
Last week, Sprint sweetened the PCTV deal price to $10 per
share, increasing its offer by $25 million, after a group of shareholders offered to sell
their shares, too. That group collectively owned about 2.2 million shares, including a
trust held by PCTV chairman Matthew Oristano and his family.
After buying that stock, Sprint now owns 49.997 percent of
PCTV.
"We felt that it was worth it to buy what they were
offering at that price," Sprint spokesman Russ Robinson said. He added that accepting
the investor-group deal triggered a provision in the previous acquisition that raised the
offering for all of the shares to $10 each.
Sprint agreed to pay $6.50 for each ATI share and to assume
$281 million in debt. ATI -- which had sold several of its market licenses to BellSouth
Corp. in 1997 -- would add 10 million homes passed to Sprint's wireless footprint,
which is currently at about 7.8 million homes.
ATI has channel licenses in 55 markets, including Seattle;
Las Vegas; Denver; Portland, Ore.; and Columbus, Ohio.
ATI is the biggest video player, with about 107,000 analog
subscribers, and it tested a high-speed Internet service in Denver and Portland.
Sprint said the deal should close in four to six months.
Sprint and MCI have both shown a keen interest over the
past year in wireless cable operators, also known as multichannel multipoint distribution
services. Both long- distance carriers are interested in the spectrum to bypass incumbent
local-exchange carrier for calling and data.
There are still some publicly owned wireless cable
companies left, including Nucentrix Broadband Networks Inc. (formerly Heartland Wireless
Communications Inc.) and Wireless One Inc.
Sprint plans to use ATI's spectrum to connect users to
its Integrated On-Demand Network (ION) high-speed Internet service. The company plans to
roll out ION in 35 cities this year.
