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Tuesday, Mar 19, 2024
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High-Tech Leap secures two major markets in Texas



High-Tech: Qualcomm Loan Helps to Get Licenses in San Antonio and Houston

A San Diego-based wireless telecom carrier left the recent federal spectrum auction committed to spend $350 million on wireless operating licenses in 22 markets nationwide.

Leap Wireless International Inc. will acquire the licenses with the help of a $125 million loan from another San Diego company, Qualcomm, Inc.

San Antonio and Houston are some of the biggest markets to which Leap gained entry during the Federal Communications Commission wireless spectrum auction, along with Providence, R.I., and Columbus, Ohio.

Leap will have to take several more steps and get FCC approval before it rolls out service in any new communities. Wireless companies may also elect to trade their licenses.

Leap is using the auction to expand its Cricket wireless service, a low-priced, no-roaming service that operates in small urban areas.

Leap is “delighted” with the auction’s outcome, said Dan Pegg, Leap’s senior vice president for public affairs. He made his comments last week, five days after one Web news service suggested Leap may join at least one other carrier to file suit over the auction.

Pegg said it would be counterproductive for Leap to enter litigation or an argument over the auction’s outcome. Leap is where it wants to be, he said.

The FCC auction occurred in an unsettled environment. Big and small carriers have been debating over how much spectrum is properly meant for each of them. The news service reporter may have referred to concerns Leap expressed during the auction process, Pegg said. Depending how the auction ended, Pegg said, Leap may have discussed the outcome with the FCC.

Leap is a 1998 spinoff from Qualcomm. Though Qualcomm has options to purchase up to 12 percent of Leap stock, the two companies’ relationship is now one of creditor and debtor, Pegg said.

Qualcomm is making its loan by transferring what is essentially a “gift certificate” for $125 million worth of spectrum, said Pegg. He said Qualcomm acquired the certificate , called an auction discount voucher , when it resolved a dispute with the FCC last year.

Leap announced it will repay Qualcomm no more than five years after the draw with a lump sum composed of principal and interest. Leap Chairman Harvey White called the loan terms “attractive” in a prepared statement.

Pegg said his company has not made a final decision on what combination of financing it will use on its $350 million spectrum buy.

The other licenses Leap acquired at auction cover New London, Conn.; Jacksonville and Melbourne, Fla.; Columbus and Indianapolis, Ind.; Lexington and Louisville, Ky.; Worcester, Mass.; Asheville, N.C.; Las Cruces, N.M.; Albany and Poughkeepsie, N.Y.; Scranton, Pa.; and Austin, Brownsville, Bryan, El Paso and McAllen, Texas.

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