AT&T Wireless 2014 Annual Report Download - page 54

Notes to Consolidated Financial Statements (continued)
Dollars in millions except per share amounts
52 | AT&T INC.
NOTE 5. ACQUISITIONS, DISPOSITIONS AND OTHER ADJUSTMENTS
Acquisitions
Spectrum Acquisitions During 2014, we acquired
$1,263 of wireless spectrum, not including Leap Wireless
International, Inc. (Leap) discussed below. During 2013,
we acquired $895 of wireless spectrum 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.
In January 2015, we submitted winning bids for 251
Advanced Wireless Service (AWS) spectrum in the AWS-3
Auction (FCC Auction 97) for $18,189. We provided the
FCC an initial down payment of $921 in October 2014
and paid the remaining down payment of $2,717 on
February 13, 2015. We will pay the balance of $14,551
on or before March 2, 2015.
Leap In March 2014, we acquired Leap, a provider of
prepaid wireless service, for $15.00 per outstanding share
of Leap’s common stock, or $1,248 (excluding Leap’s cash
on hand), 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.
The values of assets acquired under the terms of the
agreement were: $3,000 in licenses, $510 in property, plant
and equipment, $520 of customer lists, $340 for trade
names and $248 of goodwill. The estimated fair value of
debt associated with the acquisition of Leap was $3,889,
all of which was redeemed or matured by July 31, 2014.
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 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.
Subsequent and Pending Acquisitions
GSF Telecom On January 16, 2015, we acquired Mexican
wireless company GSF Telecom Holdings, S.A.P.I. de C.V.
(GSF Telecom) for $2,500, less net debt of approximately
$700. GSF Telecom offers service under both the Iusacell
and Unefon brand names in Mexico.
NII Holdings Inc. On January 26, 2015, we entered into
an agreement with NII Holdings Inc. (NII) to acquire its
wireless business in Mexico for $1,875, less any outstanding
net debt held by the business at closing, in a transaction
pursuant to Section 363 of the U.S. Bankruptcy Code.
We will acquire companies, which operate under the name
Nextel Mexico, and approximately 3.0 million subscribers.
DIRECTV In May 2014, we announced a merger agreement
to acquire DIRECTV in a stock-and-cash transaction
for $95.00 per share of DIRECTV’s common stock, or
approximately $48,500 at the date of announcement. As of
December 31, 2014, DIRECTV had approximately $16,177 in
net debt. Each DIRECTV shareholder will receive cash of
$28.50 per share and $66.50 per share in our stock subject
to a collar such that DIRECTV shareholders will receive 1.905
AT&T shares if our average stock price is below $34.90 per
share at closing and 1.724 AT&T shares if our average stock
price is above $38.58 at closing. If our average stock price
(calculated in accordance with the merger agreement with
DIRECTV) is between $34.90 and $38.58 at closing, then
DIRECTV shareholders will receive a number of shares
between 1.724 and 1.905, equal to $66.50 in value.
DIRECTV is a premier pay TV provider in the United States
and Latin America, with a high-quality customer base, the
best selection of programming, the best technology for
delivering and viewing high-quality video on any device
and the best customer satisfaction among major U.S.
cable and satellite TV providers.
The merger agreement was adopted by DIRECTV’s
stockholders on September 25, 2014 and remains subject
to review by the FCC and the Department of Justice and
to other closing conditions. It is also a condition that all
necessary consents by certain foreign governmental entities
have been obtained and are in full force and effect.
The transaction is expected to close in the first half of
2015. The merger agreement provides certain mutual
termination rights for us and DIRECTV, including the right
of either party to terminate the agreement if the merger
is not consummated by May 18, 2015, subject to extension
in certain cases to a date no later than November13, 2015.
Either party may also terminate the agreement if an order
permanently restraining, enjoining, or otherwise prohibiting
consummation of the merger becomes final and
nonappealable. In October 2014, DIRECTV and the National
Football League renewed their agreement for the “NFL
Sunday Ticket” service substantially on the terms discussed