NextWave Wireless Announces First Quarter 2008 Financial Results

Company Reports 25 Percent Quarterly Revenue Growth Over Fourth Quarter of 2007

NextWave Wireless Inc. (NASDAQ: WAVE), a global provider of wireless broadband and mobile multimedia products, filed its Quarterly Report on Form 10-Q for the first fiscal quarter which ended March 29, 2008. Financial schedules are included with this release.

NextWave reported GAAP revenues of $26 million for the first quarter of 2008, a $5.2 million or 25 percent increase over the fourth quarter of 2007. The significant increase in quarterly revenue was driven by increased sales of NextWave’s wireless broadband network equipment and subscriber devices and by the continued growth in mobile device software royalties generated by the Company’s PacketVideo subsidiary. Additionally, the Company reported $3.5 million quarter-over-quarter growth, or a 6 percent increase, in both short term and long term deferred revenue which generally represents billed product and royalties for which payment is received but is not immediately eligible for US GAAP revenue recognition due to the accounting principles associated with multi-element arrangements. Accordingly, billed revenues for the quarter were $29.5 million.

“We continue to see growing demand for PacketVideo’s industry-leading multimedia software and our advanced mobile broadband network solutions,” said Allen Salmasi, chairman and chief executive officer of NextWave Wireless Inc. “In addition, we expect to begin generating revenues from our recently announced second-generation WiMAX chipsets and network products, our breakthrough MXtvTM and TDtvTM mobile television systems, and PacketVideo’s TellyTM pocket mobile broadcast receiver later this year.”

NextWave reported that its loss from operations for the first quarter of 2008 was ($79.6) million, a decrease of $16.6 million or 17 percent over the fourth quarter of 2007. The first quarter of 2008 loss from operations includes $21.3 million of non-cash expenses. These non-cash expenses include $8.8 million of intangible asset amortization expenses, $8.5 million in employee compensation expenses for share-based compensation and performance bonuses, and $4.0 million of depreciation and other non-cash operating expenses. Excluding these non–cash operating expenses of $21.3 million, the cash-based loss from operations for the first quarter of 2008 was ($58.3) million, compared to ($66.5) million for the fourth quarter of 2007, a decrease of $8.2 million. This decrease was primarily due to increased revenues of $5.2 million and decreased operating expenses of $3.0 million.

“Driving revenues and developing cutting-edge mobile technologies while maintaining a tight focus on costs remains our top priority,” Salmasi added. “Our decision earlier this year to eliminate operational redundancies and streamline our global operation into two business units is just one example of our commitment to aggressively manage costs.”

Total reported net interest expense in the first quarter of 2008 was $13.1 million compared to $8.1 million in the fourth quarter of 2007. Net loss available to common shares for the first quarter 2008 was ($102.2) million, or ($1.09) per share, compared to a net loss available to common shares of ($111.7) million, or ($1.21) per share for the fourth quarter of 2007.

NextWave’s cash, cash equivalents, marketable securities, and restricted cash totaled $142.5 million at the end of the first quarter of 2008, compared to $241.9 million at the end of the fourth quarter of 2007. As of December 29, 2007, NextWave maintained $75.0 million in a restricted collateral account associated with the 7% Senior Secured Notes. In March 2008, the Company amended the original purchase agreement for the Notes and the Company may now withdraw up to the full amount of the $75.0 million cash reserve account and is permitted to incur an additional $25.0 million of indebtedness for the purposes of funding a working capital line of credit and an additional $100.0 million of second lien indebtedness subject to specified subordination terms, appropriate inter-creditor arrangements, and the payment of consent fees aggregating $10.5 million.

The Company utilized $99.4 million of cash in the first quarter of 2008 of which $58.3 million was used in operations; $13.4 million was used for spectrum lease payments, spectrum purchases, and capital expenditures; $13.2 million in working capital and other operating expenses; $10.1 million was used to pay net interest expense; and $4.4 million was paid to the selling shareholders of IPWireless (acquired in the second quarter of 2007) as a result of the achievement of certain product shipment milestones in 2007.

On April 23, 2008, the Company retained Deutsche Bank and UBS Investment Bank to explore the sale of its wireless spectrum holdings in the United States. The Company intends to use the proceeds from any sale of its spectrum assets to strengthen its balance sheet, retire debt, and continue the development and commercialization of its wireless broadband products. As of March 29, 2008, the aggregate carrying value of the Company’s wireless spectrum license assets in the United States was $457.4 million, net of deferred tax liabilities. The carrying value of these spectrum assets reflects the Company’s original acquisition cost and does not provide an indication of fair market value or expected sales proceeds. There is no assurance that the sale of any spectrum licenses will occur and any proposed sale is subject to final approval by the Company’s Board of Directors as well as the Federal Communications Commission.