FiberTower and First Avenue Networks, two of the relatively new companies targeting the wireless network backhaul market, have signed an agreement to combine their spectrum assets in a $1.5 billion all-stock merger transaction.

The deal comes as the backhaul market has become more heated in the last few weeks with the certification of Fixed WiMAX technology, the emergence of new technology from vendors, and the recent re-entry of Nextlink, the XO Holdings unit that owns LMDS spectrum in markets across the country.

Under the terms of the agreement, First Avenue will issue approximately 73.7 million of its common shares, subject to adjustment, to the FiberTower shareholders. As a result, FiberTower shareholders will own 51 percent of the combined entity on a fully diluted basis, the companies said in a statement. The new combined entity also will be called FiberTower. First Avenue Networks CEO Michael Gallagher will become CEO of the merged company.

The new company will have spectrum holdings in the 24 Ghz, 39 Ghz and common carrier bands, and an installed base in 12 markets with more than 1000 sites. Existing backhaul deals include five of the top 10 celullar carriers.

“This merger is about accelerating business growth and minimizing the associated business risks,” Gallagher said. “The market is aggressively implementing high capacity applications, and wireless transport is ideal for backhauling these services. This deal puts us on the fast track to scale the combined company on a nationwide basis.”