Unwired will spend $15.7 million as part of a new national spectrum swap with regional television and telecommunications provider, Austar.
Under the arrangement, Austar will handover its 2.3GHz spectrum licenses to Unwired in most major metropolitan cities across the country. These will be exchanged for some of Unwired's 3.5GHz spectrum licenses. Unwired purchased the 3.5GHz national spectrum in 2000.
According to an ASX statement, the result would leave Austar holding licenses that align with its television subscriptions based in regional Australia, while the broadband carrier would maintain 2.3GHz and 3.5GHz licenses in metro areas. These two spectrums have been identified internationally as the best for providing WiMAX-compatible wireless broadband services.
Unwired CEO, David Spence, said the agreement would save it spending $50 million on acquiring the 2.3GHz spectrum nationally. The carrier had secured the $15.7 million loan from Allco Finance to finance the deal.
"With the spectrum swap we are able to concentrate on the centres of population to build the scale of business we want for only $15 million," he said in a statement. The contract would also eliminate Unwired's $3 million a-year leasing costs for utilising the spectrum from Austar, Spemce said.
Austar CEO, John Porter, stated the rationalisation of spectrum will leave it in a position to develop plans to launch its own broadband service. The company currently offers television, dial-up Internet and mobile services.
"Wireless broadband is ideally suited to regional markets, and we want to build on our well established brand and operational capabilities to serve our regional customers," he said.
The two networks would be interoperable, with both parties entering into a wholesale arrangement.
The new partnership comes just weeks after Unwired confirmed it was in discussions with several parties regarding investment funding to expand its wireless broadband network. It currently operates services in the greater Sydney region.
Unwired chief financial officer, Vicky Potts, warned that it would take some time for services to be rolled out across the country, and said that it took at least nine months to build the network in a capital city. The carrier's first interest is to build up operations in Melbourne and Brisbane, but it would look to rollout services across multiple sites simultaneously.
"Our first focus was to build the Sydney build, while the second was to have clarity on the ownership of spectrum," she said. "Our third objective is to build in other major cities.
"Our Sydney network is fully funded, so we're now making sure we are fully funded for the larger expansion plans."
Potts said she expected both Unwired and Austar would continue to use the channel to sell products to consumers. Unwired currently has a distribution agreement with Tecksel, as well as wholesale arrangements with other carriers, such as Telstra, Optus and Veritel. It also works with retailers, including Harvey Norman and Dick Smith.
"I wouldn't be surprised if Austar used many of the same channels," she said. "In regional areas, this strategy is even more effective."
Combined, the two organisation would now have the ability to provide services to 12-13 million Australians, she said.
The deal is now subject to approval from the Australian Communication and Media Authority.