Sprint Buying 10MHz Of Spectrum For $105 Million

Sprint will purchase 10 MHz of spectrum licenses from wireless communications provider Wirefree Partners III for $105 million, according to its recently filed quarterly report. The nation's number three carrier plans to use the spectrum to provide better coverage across 16 markets.

Wirefree was formed by former executives of Sprint affiliate AirGate PCS, which was acquired by Alamosa Holdings, which Sprint then purchased. In 2005, during the Federal Communications Commission's broadband PCS Auction 58, Wirefree paid around $150 million for 16 licenses covering a little over 18 million points of presence (POPs). Besides Sprint, Verizon Wireless and Leap Wireless were the other major bidders in Auction 58.

After the FCC auction concluded, Wirefree leased 5 MHz to Sprint in each of its markets and also built out its own wireless network aimed at attracting enterprises with the remaining 5 MHz. Although it completed its build-out in 2008, Wirefree said in FCC filings that its business was not proving to be successful and although it was keeping its network, over the long term it would not be cost-effective to operate it.

Sprint's CDMA network runs in the 1900-MHz band, which is the same band as Wirefree's licenses. Markets covered by the licenses include Seattle, Virginia Beach, Va., Gallup, N.M., Cincinnati, and Austin, Texas.

With a finite amount of spectrum available, the FCC has stated in the next 10 years it is planning to free up 500 MHz of spectrum, of which 300 MHz of high-value spectrum will be opened up within the next five years for mobile use.

The lower the spectrum, the wider the area a carrier can cover, and it is also more cost effective, noted Neil Shah, an analyst in the wireless devices strategies practice at Strategy Analytics. "Access to this slice of spectrum allows Sprint to grow its CDMA footprint across key markets... enabling better cellular coverage for its subscribers,'' he said in an e-mail. "Spectrum is a scarce resource and it plays an important role in a wireless carrier's growth and expansion in covering major POPs (current and prospective subscribers), and, access to any chunk of spectrum is a bonus in a highly competitive market such as the U.S.A."

The Wirefree transaction is expected to close during the fourth quarter, Sprint said in its FCC filing. Sprint did not respond to an inquiry about the purchase in time for this writing.