DECEMBER 20, 2010, 9:45 A.M. ET.

AT&T Invests in 4G Spectrum

By SHARA TIBKEN

NEW YORK—AT&T Inc. will pay $1.93 billion for a swath of spectrum licenses from Qualcomm Inc. as AT&T looks to bolster its fourth-generation service while Qualcomm shutters its FLO TV service.

The deal frees up valuable wireless spectrum for AT&T to deploy as part of its fourth-generation network, while allowing wireless-chip maker Qualcomm to stop investing in its struggling mobile broadcast video service. While Qualcomm has been benefiting from its exposure to smartphones, the FLO TV business has been disappointing and has weighed on results.

"FLO TV has been a thorn in investors' sides for a long time," Bernstein analyst Stacy Rasgon said. He added that Qualcomm is making a good return on its investment of about $700 million for the spectrum. "I'm glad to see them get out of it."

Qualcomm shares, up 7% this year, edged up 1% to $49.94 premarket, while AT&T, up 4.2% this year, grew 24 cents to $29.45.

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Canadians Face Hurdles in Search of Faster Wireless Network Access thousands of business sources not available on the free web. Learn More Qualcomm in October said it would suspend sales of devices for FLO TV—which delivers video to cellphones using a broadcast network—but that customers would continue to receive programming into the spring.

The company then said during its fourth-quarter results in November that it would be exiting the business and that it was considering several options for FLO TV, including setting up a joint venture or selling the spectrum licenses.

Qualcomm disclosed Monday that FLO TV will be shut down in March. The company had already disclosed restructuring charges of up to an estimated $175 million related to the October announcement, and the figure is expected to grow.

The company wasn't immediately available to comment further.

AT&T is buying spectrum licenses in the lower 700MHz frequency band. It plans to deploy the spectrum as part of longer-term plans for its fourth-generation network, once "compatible handsets and network equipment are developed." The companies expect the sale to close in the second half of 2011.

The price AT&T paid for the spectrum is similar to or lower than comparable spectrum prices, AT&T spokesman McCall Butler said.

Wireless carriers more and more are putting their irons in the 4G fire as they continue to try to lure customers away from one another by racing to put out the latest in technology. Fourth-generation wireless technology is significantly faster than 3G, which is mostly the standard for smartphones.

The move is also forward-looking for AT&T because of the major-city concentration of the spectrum. AT&T has been the subject of much complaining about its service in major cities for Apple Inc.'s iPhone, which is heavy on data usage. Plans for a 4G iPhone haven't been announced.

—Nathan Becker contributed to this article.

Write to Shara Tibken at shara.tibken@dowjones.com

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