Nextel, in an FCC filing last week, raised ’significant issues an...

interference at 800 MHz. A staff item forwarded to the 8th floor would have Nextel pay the costs of relocating incumbents at 800 MHz and then pay the difference between that and spectrum it would receive at 1.9 GHz. In a “consensus plan” backed by Nextel and numerous public safety groups, a spectrum swap would entail Nextel giving up spectrum in some bands in return for spectrum it would receive elsewhere, including 10 MHz at 1.9 GHz. Verizon Wireless, which has been arguing the FCC should auction off spectrum at 1.9 GHz that’s part of an interference solution for 800 MHz, told the FCC earlier this month it would place an opening bid of $5 billion if the agency were to hold a 1.9 GHz auction for PCS spectrum. In a research note last week, UBS said Nextel could pay $2-$3 billion as part of any plan ultimately adopted by the Commission. The consensus plan would have Nextel pay $850 million for retuning public safety and private wireless incumbents at 800 MHz. “We don’t believe ‘cash is king’ in this situation,” UBS said. “Despite Verizon Wireless’s announced intention to bid at least $5 billion for the 1.9 GHz spectrum that is part of the consensus plan, should it be put up for auction, we believe that Nextel will prevail in obtaining the 1.9 GHz spectrum as part of the proposed spectrum swap.” As other analysts have noted, UBS said it expected Nextel would have to pay more than $850 million. “Given the sell off in Nextel’s stock price over the past 2 months, we believe this extra outlay (of potentially about $1-$2 per share above what was originally expected) had already been more than reflected in Nextel’s trading value,” it said: “The downside from announcement on this issue is limited.”