AT&T Wireless 2013 Annual Report Download - page 51

AT&T Inc. | 49
NOTE 5. ACQUISITIONS, DISPOSITIONS AND OTHER ADJUSTMENTS
Acquisitions
Spectrum Acquisitions During 2013, we acquired $895 of
wireless spectrum and operations from various companies,
not including the 700 MHz, Atlantic Tele-Network Inc. (ATNI),
and NextWave purchases discussed below. During 2012, we
acquired $855 of wireless spectrum from various companies.
During 2011, we acquired $33 of wireless spectrum from
various companies, not including the Qualcomm spectrum
purchase discussed below.
700 MHz Spectrum In September 2013, we acquired
spectrum in the 700 MHz B band from Verizon Wireless
for $1,900 in cash and an assignment of Advanced
Wireless Service (AWS) spectrum licenses in five markets.
The 700 MHz licenses acquired by AT&T cover 42 million
people in 18 states. We recognized a gain of approximately
$293 on this and other spectrum transactions.
Atlantic Tele-Network In September 2013, we acquired
ATNI’s U.S. retail wireless operations, operated under the
Alltel brand, for $806 in cash, which included closing
adjustments. Under the terms of the agreement, we
acquired wireless properties, with a value of $322 in
licenses and $296 of goodwill.
NextWave In January 2013, we completed the acquisition
of NextWave Wireless Inc. (NextWave), which held wireless
licenses in the Wireless Communication Services and AWS
bands. We acquired all the equity and purchased a portion
of the debt of NextWave for $605. The transaction was
accounted for as an asset acquisition of spectrum.
Qualcomm Spectrum Purchase In December 2011,
we completed our purchase of spectrum licenses in
the Lower 700 MHz frequency band from Qualcomm
Incorporated for approximately $1,925 in cash. The
spectrum covers more than 300 million people total
nationwide, including 12 MHz of Lower 700 MHz D and E
block spectrum covering more than 70 million people in
five of the top 15 metropolitan areas and 6 MHz of Lower
700 MHz D block spectrum covering more than 230
million people across the rest of the United States.
Purchase of Wireless Partnership Minority Interest In
July 2011, we completed the acquisition of Convergys
Corporation’s minority interest in the Cincinnati SMSA
Limited Partnership and an associated cell tower holding
company for approximately $320 in cash.
Pending Acquisitions
Leap In July 2013, we announced an agreement to
acquire Leap Wireless International, Inc. (Leap), a
provider of prepaid wireless service, for fifteen dollars
per outstanding share of Leap’s common stock, or
approximately $1,260, plus one nontransferable
contingent value right (CVR) per share. The CVR will
entitle each Leap stockholder to a pro rata share of
the net proceeds of the future sale of the Chicago
700 MHz A-band FCC license held by Leap. As of
September 30, 2013, Leap had approximately $3,100
of debt, net of cash. Under the terms of the agreement,
we will acquire all of Leap’s stock and, thereby, acquire
all of its wireless properties, including spectrum licenses,
network assets, retail stores and subscribers.
The agreement was approved by Leap’s stockholders on
October 30, 2013. The transaction is subject to review
by the FCC and Department of Justice (DOJ). The review
process is underway at both agencies. The transaction
is expected to close in the first quarter of 2014. The
agreement provides both parties with certain termination
rights if the transaction does not close by July 11, 2014,
which can be extended until January 11, 2015, if certain
conditions have not been met by that date. Under certain
circumstances, Leap may be required to pay a termination
fee or AT&T may be required to provide Leap with a
three-year roaming agreement for LTE data coverage
in certain Leap markets lacking LTE coverage, if the
transaction does not close. If Leap enters into the roaming
agreement, AT&T will then have the option within 30 days
after entry into the roaming agreement to purchase certain
specified Leap spectrum assets. If AT&T does not exercise
its right to purchase all of the specified Leap spectrum
assets, Leap can then within 60 days after expiration of
AT&T’s option require AT&T to purchase all of the specified
spectrum assets.
Dispositions
América Móvil In 2013, we sold a portion of our shares
in América Móvil for approximately $1,179. We sold the
shares to maintain our historical ownership percentage
in conjunction with América Móvil’s repurchase activity.
(See Note 8)
Advertising Solutions On May 8, 2012, we completed
the sale of our Advertising Solutions segment to an affiliate
of Cerberus Capital Management, L.P. for approximately
$740 in cash after closing adjustments, a $200 advance,
which was repaid in 2013, and a 47 percent equity interest
in the new entity, YP Holdings. Our operating results include
the results of the Advertising Solutions segment through
May 8, 2012.
Tender of Telmex Shares In August 2011, the Board of
Directors of América Móvil approved a tender offer for the
remaining outstanding shares of Télefonos de México, S.A.
de C.V. (Telmex) that were not already owned by América
Móvil. We tendered all of our shares of Telmex for $1,197
of cash. Telmex was accounted for as an equity method
investment (see Note 8).