Current weather

  • Scattered clouds
  • 54°
    Scattered clouds

Native companies to get refund from wireless investment

Posted: Thursday, November 14, 2002

ANCHORAGE (AP) -- Three Alaska Native corporations will get back the money they invested in a wireless telecommunications venture with AT&T Wireless.

Sealaska Corp., Doyon Ltd. and Arctic Slope Regional Corp. and other smaller investors in Anchorage-based Alaska Native Wireless will receive $233 million, according to an announcement Wednesday from AT&T Wireless.

''We will get our investment back, with some return,'' said Conrad Bagne, chief operating officer for Arctic Slope and the spokesman for Alaska Native Wireless.

The Native corporations partnered with AT&T Wireless two years ago to bid on wireless licenses auctioned by the Federal Communications Commission.

Pledging $2.9 billion, most of it put up by AT&T, they were the top bidder and won 44 licenses to sell wireless services in cities including New York, Los Angeles, Portland, Denver, Minneapolis and Tampa. The wireless industry was booming at the time and the investment looked like a golden opportunity to the Native companies. Since then, wireless company stocks have plummeted, the licenses got tied up in lawsuits and the Alaska companies lobbied for a refund.

AT&T owns 40 percent of Alaska Native Wireless. The three Native corporations own the remaining 60 percent with investment firms Toronto Dominion Capital of New York and Madison Dearborn Partners of Chicago and a few smaller investors.

Another part of Wednesday's agreement reduces AT&T's exposure to future risk. Under the partnership, the three Native firms and the other investors have the option to require AT&T to buy out their interests after March 2007. If they were to exercise that option, it posed a potential obligation of $1.6 billion to AT&T, said David Caouette, spokesman for AT&T Wireless. The agreement revised the figure down to $145 million.

''We believe the amended terms of the agreement are fair to all parties and were necessary given the extent of the delay and the uncertainty about the auction, all of which were not expected back in November 2000,'' Caouette said.

In fall and winter 2000, when Alaska Native Wireless was formed, the telecom world was rosy. In December of that year, Cook Inlet Region Inc. announced a huge payout to its Native shareholders based on its investment in VoiceStream Wireless. Anchorage-based Cook Inlet wrote checks averaging $50,000 to its shareholders as it cashed out the investment. A few months later, the typical shareholder got another $15,000.

Other Native firms wanted in on the action, and the FCC license auction seemed like the perfect vehicle.

But the sale has been fraught with uncertainty. The bulk of the licences Alaska Native Wireless won had been previously owned by NextWave Telecom Inc., which became bogged down in Chapter 11 bankruptcy. Lawyers for NextWave sued the FCC, arguing that bankruptcy laws forbid the government from seizing and reauctioning the licenses.

An appeals court agreed. The FCC asked the U.S. Supreme Court to overturn the ruling. A decision by the high court is pending.

If the licenses are eventually awarded to Alaska Native Wireless, Caouette said, AT&T Wireless will fund the balance of the purchase price.

But the three Native firms want out of the NextWave debacle.

''If they give us the opportunity, we would opt out,'' Bagne said. ''The telecom market has changed so significantly since the auction was held.''

Sealaska, Arctic Slope and Doyon and their partners won 15 undisputed licenses in the auction, and they still plan to develop a business plan for those frequencies, Bagne said.



CONTACT US

  • 150 Trading Bay Rd, Kenai, AK 99611
  • Switchboard: 907-283-7551
  • Circulation and Delivery: 907-283-3584
  • Newsroom Fax: 907-283-3299
  • Business Fax: 907-283-3299
  • Accounts Receivable: 907-335-1257
  • View the Staff Directory
  • or Send feedback

ADVERTISING

SUBSCRIBER SERVICES

SOCIAL NETWORKING

MORRIS ALASKA NEWS