NextWave Buys IPWireless

NextWave Wireless Inc. (Nasdaq: WAVE) said today that it will buy IPWireless Inc. in an initial $100 million payout of cash and stock for the firm's wireless broadband technology portfolio. San Bruno, Calif.-based IPWireless raised over $200 million in VC and strategic funding during eight years of operation.

The terms of the deal are fairly complex but could result in IPWireless's shareholders seeing some more return on investment over time. NextWave will initially pay $100 million for the firm -- $25 million in cash and $75 million in NextWave common stock. Up to $135 million more could be paid out "based on the achievement of certain revenue milestones" between 2007 and 2009. (See NextWave Buys IPWireless.)

Rumors of an IPWireless sell-off have been floating round the industry for a couple of months now. NextWave cited a recent NYC public safety network win and IPWireless's development of a mobile TV system using its technology as part of the reason for the buyout. (See 3GSM: The Vino & The Damage Done, Northrop Grumman Wins NYC Safety Deal, and IPMobile Tests TD-CDMA.)

Founded in 1999, IPWireless took a long bet on its brand of wireless broadband technology being successful. The company developed a high-speed data delivery system using time-division duplex (TDD), or "unpaired" spectrum, that can send and receive data over the same channel. This was in contrast to conventional 3G networks, which use frequency-division duplex (FDD), or "paired" spectrum. FDD requires two channels and therefore uses more bandwidth than TDD systems.

IPWireless initially pushed data-only 3G networks in the U.S. (See Teewinot First in US With UMTS.) It then eyed opportunities in Eastern and Western Europe. (See IPWireless Fattens Its Wallet.) New Zealand called on the startup for a high-speed data network. (See IPWireless Walks New Zealand.) The Malaysians also implemented its technology. (See IPWireless Walks New Zealand.)

Along the way, the firm was linked with major operators such as Orange SA (London/Paris: OGE) and Vodafone Group plc (NYSE: VOD). Sprint Corp. (NYSE: S) tested IPWireless's kit and even made a investment in the company. (See Sprint: Still Going Beyond 3G and Orange Trials IPWireless.)

IPWireless, however, was somewhat overshadowed by its wireless broadband rival Flarion Technologies Inc. , which Qualcomm Inc. (Nasdaq: QCOM) bought for $600 million in the summer of 2005, and the emergence of WiMax wireless broadband technolgy as a serious contender in the marketplace. (See Qualcomm Calls on Flarion and WiMax: The Landscape Unfolds.)

WiMax can support both time division duplex and frequency division duplex modes of operation. This combined with the ever-growing number of vendors getting behind the standard has made it an increasing threat for IPWireless and others in the proprietary wireless broadband game.

NextWave says that it will work to incorporate both WiMax and WiFi in IPWireless's product portfolio for operators that want it.

The acquisition is expected to close in the second quarter of 2007. IPWireless will operate as a wholly owned subsidiary of NextWave.

— Dan Jones, Site Editor, Unstrung

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