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Craig Wireless Enters into Option for Acquisition of Interest in Spectrum License Holders in Argentina

12/21/09 - Craig Wireless Systems Ltd. (TSX: CWG) announced it has entered into an agreement that provides the Company with an assignment right, a purchase option and rights of first refusal over shares in two Argentinean corporations.

Specifically, the rights apply firstly to the acquisition of a 25% interest in MAXCOM SRL, an Argentine limited liability company that holds a 50.0004% interest in Reves, S.A., the licensee of all licenses and channels assigned by the Federal Broadcasting Committee of the Republic of Argentina in the Province of Tucuman, together with an option to purchase an additional shares in the Maxcom that would result in the Company having a majority interest in Reves, S.A. (all acquired and optioned shares in the capital of Maxcom being collectively, the "Maxcom Shares"). Secondly, the rights apply to an acquisition of 85% of the shares (the "Trunking Shares") in TRUNKING JUNIN S.A., an Argentine corporation from Maxcom. TRUNKING JUNIN S.A., is the licensee of 24 MHZ of bandwidth in the 2.5-2.8 GHz spectrum range covering a 180 kilometer radius from Buenos Aires, Argentina.

The Company considers a presence in Argentina as a good stepping stone for entry into the South American market. Although the Company has decided that it would not be an appropriate use of the Company's cash resources to pursue the purchase of the Maxcom Shares and the Trunking Shares (collectively, the "Shares") at this time, in order to preserve the right to complete the acquisition of the Shares at a later date, the Company has consented to Manalta Investment Company Ltd., the majority shareholder of the Company, or its nominee ("Manalta") acquiring Shares on the condition that Manalta enter into the Assignment and Option Agreement with the Company. This arrangement has been approved by the Company's independent directors. Although the purchase agreements in respect of the Maxcom Shares and the Trunking Shares have been executed, the closing of the transactions contemplated thereby remains subject to a number of conditions including due diligence. Accordingly, it is not a certainty that the acquisition of either of the Maxcom Shares or the Trunking Shares will be completed by Manalta (or the Company, in the event that it exercises its assignment rights).

Under the terms of the Assignment and Option Agreement, at any time in advance of the closing of the purchase of the Shares, the Company has the right to step into the shoes of Manalta causing Manalta to assign its position under the associated purchase agreements to the Company, in exchange for payment by Craig Wireless of the related expenses incurred by Manalta to that point, together with any holding costs. The Assignment and Option Agreement also provides that after the closing of one or both of the purchase transactions with respect to the Shares, the Company will hold an option to purchase the Shares for the greater of (i) the fair market value of the Shares; and (ii) (A) the costs noted above, plus (B) any additional investments that may have been made by Manalta in the subject companies, plus (C) an annualized percentage of 25% multiplied by all of the foregoing expenditures. The option expires 12 months after closing of the purchase transactions. Lastly, the Assignment and Option Agreement provides the Company with a right of first refusal over any offer to purchase the Shares any time from the date of the Assignment and Option Agreement to the date that is 12 months after closing of the share purchase transactions in respect of the Shares.

"Craig Wireless is excited about the possibility of entering the Argentina market," said Rod Vandenbos, President of Craig Wireless. "Argentina, with a population of 41 million, has the highest GDP per capita and the most educated population in South America. In addition, current broadband penetration is only 11.6%. (Source: The CIA -The World Factbook website, ABI Research.) Exercising our rights under the Assignment and Option Agreement is a priority for the Company if and when we are in a financial position to do so."

The 4G WiMAX customer experience is similar to that provided by Wi-Fi, but without the short range limitations of a traditional Internet hot spot. Wireless WiMAX 4G technology differs from Wi-Fi, and provides service areas measured in kilometres, not metres.

By Robert Hoskins

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