AT&T acquires Qualcomm's FLO TV spectrum for $1.9 billion

Qualcomm (NASDAQ:QCOM) has agreed to sell the wireless spectrum underlying its ill-fated FLO TV mobile broadcast solution to AT&T (NYSE:T) for $1.92 billion. The spectrum, in the Lower 700 MHz frequency band, spans more than 300 million consumers across the U.S. AT&T said it plans to deploy the spectrum as a supplemental downlink in conjunction with its 4G mobile broadband network rollout, leveraging the resulting capacity gains to fulfill subscriber demand for rich media content. The firms expect the transaction to close in the second half of 2011, with AT&T expected to begin deploying the spectrum as compatible devices and network equipment are developed.  

Qualcomm reportedly spent $683 million acquiring the FLO TV spectrum, which encompasses 12 MHz of D and E block spectrum covering over 70 million people in New York City, Boston, Philadelphia, Los Angeles and San Francisco along with 6 MHz of D block spectrum blanketing more than 230 million people across the remainder of the country. Qualcomm has said it invested about $800 million in total (including spectrum, network build-out and marketing costs) to launch the FLO TV network, but fewer than 1 million customers signed up for the service. Qualcomm anticipates its exit from the FLO business to incur charges between $125 million and $175 million in fiscal 2011.

FLO TV features simulcast and time-shifted broadcast content from partners including ABC, CBS, NBC, Fox, ESPN, MTV and CNN. Initially available only in limited markets, FLO TV went nationwide in mid-2009 in conjunction with U.S. broadcasters' long-planned transition from analog to digital, which freed up the spectrum in question. Qualcomm first acknowledged plans to divest FLO TV in late July; chairman and CEO Paul Jacobs said at the time the company was exploring "a number of alternatives" for the unit, including discussions with prospective partners. Qualcomm will terminate FLO TV services on March 27.

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