MetroPCS Eyes TerreStar

US regional operator MetroPCS is “exploring a purchase of assets” from TerreStar, the bankrupt US mobile satellite operator, according to the Wall Street Journal.

MetroPCS is one of a number of potential bidders for TerreStar, which could be worth more than US$1 billion, says the report. “No offer has been made and a deal may never materialise,” cautioned the newspaper, quoting sources.

The potential attraction for MetroPCS is clear: TerreStar’s nationwide spectrum assets and coverage would help the US operator to fill out the geographic footprint. TerreStar uses the 2 GHz MSS band. That satellite was supposed to handoff to AT&T cellular service in urban areas. When the service begins operation.

Harris built the 18-meter (60 foot) antenna reflector for the 2 GHz TerreStar-1 satellite (above) operated by TerreStar Corporation. The satellite is now operational — but the company is bankrupt.

The fate of the AT&T/TerreStar Genus smartphone, the $250 million TerreStar satellite, the associated 2 GHz satphone service (and their cellular handoff and ATC frequencies), are currently very much in the air.

TerreStar owes about US$1 billion in debt to senior secured bondholders led by Echostar, the satellite equipment vendor. “For now, TerreStar’s largest creditor, EchoStar, appears poised to win the struggling business,” says the Journal. MetroPCS might also face regulatory barriers to pulling off any deal.

TerreStar filed for chapter 11 bankruptcy protection in October. It built up huge debts building a satellite-based network and holds spectrum in the 2GHz band. The company launched its first satellite in July 2009.

Tim Farrar, a satellite industry consultant, said satellite companies have had difficulty selling wireless spectrum to cellular providers because the holder must offer integrated satellite and terrestrial phone services, which is a costly prospect.

As a result, he said any MetroPCS deal may be contingent on a change to the rules governing TerreStar’s spectrum.

“All the cellular carriers have looked at this satellite spectrum in the past. Nobody has made a formal offer to date,” Farrar said.

MetroPCS is ambitious to expand its US network. Just this week it announced the spread of its LTE network into three additional cities, bringing the total to nine. It is still the only US operator to date to have launched an LTE handset, the Samsung Craft.

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Posted by Sam Churchill on .

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