NextWave Gets $2.5-Billion Loan Pledge

NextWave Telecom Inc. said Tuesday that it has received a $2.5-billion loan commitment from UBS Warburg to help build a wireless data transmission network, contingent upon the bankrupt carrier gaining control of disputed U.S. airwaves.

The Hawthorne, N.Y.-based company, which won a similar $300-million commitment from Qualcomm Inc. last week, also hired the Swiss-owned investment bank to help complete a bankruptcy reorganization plan that might raise $5.5 billion. The loan will become a nine-year term loan if not repaid within a year.

Control of the airwaves has been contested since the Federal Communications Commission repossessed NextWave’s licenses last year, auctioned them to 21 bidders in January for $15.9 billion and was set back in June by an appeals court. Analysts said the company probably is pushing a business plan to boost chances of settling with the government and bidders such as Verizon Wireless Inc.

The U.S. Court of Appeals for the District of Columbia ruled that the FCC broke the law by seizing the licenses while NextWave was in bankruptcy protection after defaulting on $4.2 billion owed to the government in 1998.

NextWave said this month that building a wireless data network in 95 markets will cost about $1.7 billion. In June, the company reached a $100-million agreement with Lucent Technologies Inc. to begin constructing networks in Detroit and Madison, Wis.

“It certainly is plausible that they could build out a network, but I think it will be challenging,” said Peter Friedland, a wireless analyst at W.R. Hambrecht & Co., who said he doesn’t own NextWave shares. “Every month, quarter, year that goes by and they don’t have a network up and running, it’s going to be more difficult for them to acquire new customers, because their competition will have acquired those customers.”

Qualcomm agreed to its recent investment in NextWave, which intends to use a transmission technology developed by the San Diego company, contingent on the carrier completing the reorganization and gaining “free and clear” control of the frequencies. Qualcomm invested $20 million in NextWave in 1995.

NextWave’s shares lost 4 cents to $7.56 in over-the-counter trading.