$7m Woosh Wireless deal may fall through

The proposed US$5.5 million (NZ$7m) acquisition of Woosh Wireless by Canadian company Craig Wireless may have hit the rocks after the Government declined to allow the two companies to pool their radio spectrum. Craig Wireless said in September it had agreed to purchase Woosh's debts to major shareholder, the Kuwait Finance House, in a move that would have then let Craig Wireless assume control of the wireless broadband provider. However, the deal was conditional on Woosh being allowed to transfer 30MHz of radio spectrum in the 2.3-2.5GHz band to Craig, which already owns 40MHz in the same band. Under existing rules, no company can own more than 40MHz in the 2.3-2.5GHz band until December next year. Woosh wrote to the Economic Development Ministry asking the Government to lift the spectrum cap early. The ministry's radio spectrum manager, Len Starling, said the ministry had advised Communications Minister Steven Joyce against doing so as it did not see a clear overall benefit. A spokeswoman for Joyce confirmed he had accepted the ministry's advice not to lift the cap. Some telcos are believed to have opposed Woosh and Craig pooling their spectrum, and Starling said lifting the cap "might negatively impact on some proposed investments". Woosh Wireless chairman Rod Inglis could not be reached for comment. Craig's offer would have seen the Canadian firm take 51 per cent of Woosh, with Inglis contributing US$500,000 to the overall purchase price and taking a 49 per cent stake. Woosh has 25,000 customers, many of them in Southland, where it won a "Project Probe" government contract in 2003 to improve rural broadband. It was voted best broadband provider in a survey by Canstar Cannex last month, but has accumulated losses of more than $179m and last year stood $11m in negative equity.