Thread,
This may be the reason for yesterday's 4 point pop in WCII. When a bigfoot like MSFT plunks down $500 million on fixed wireless, people listen.
Group Is Close to Investment Telecom Newcomer Teligent
from Friday's Wall Street Journal
A group led by buyout firm Hicks, Muse, Tate & Furst Inc. and Microsoft Corp. is close to investing $500 million in Teligent Inc., a telecommunications newcomer that competes against the Bell telephone companies.
People familiar with the situation said Microsoft is close to investing about $200 million in Teligent. The Redmond, Wash.,
software company has been investing heavily in telecommunications companies, which are potential distribution channels for its products.
Hicks Muse also is close to investing $200 million in Teligent, based in Vienna, Va., people close to the situation said. Chase Capital Partners, an affiliate of Chase Manhattan Corp., and DB Capital Partners, an affiliate of Deutsche Bank Alex. Brown, and Olympus Partners are close to investing a total of about $100 million.
Negotiations were continuing Thursday night, and any deal could still fall apart.
A Teligent spokesman declined to comment. Representatives of Microsoft, Hicks Muse and Chase Capital declined to comment. Representatives of DB Capital and Olympus Partners couldn't be reached.
The investors are the latest cash-rich players to pour money into start-up telephone companies that hope to steal a chunk of the $100 billion local-telephone market from the Bells and GTE Corp.
Earlier this year, Hicks Muse invested $250 million in RCN Corp., a small company that offers local telephone and cable-television services on the East Coast. (RCN also attracted a recent investment from Microsoft co-founder Paul Allen.) Meanwhile, Forstmann Little & Co., another leveraged buyout firm, agreed to invest about $1 billion for a 12% stake in local carrier McLeodUSA Inc.
The idea is that companies such as McLeodUSA, Teligent and RCN, sometimes known as competitive local-exchange carriers, or CLECs, will deliver big returns in the future. So far, CLECs operate less than 5% of the local telephone lines in the U.S., but investors see the upstarts eventually controlling as much as 40% of the market.
Teligent delivers local service to business customers using so-called fixed wireless technology, which uses high-frequency airwaves and rooftop antennas to transmit and receive voice and data traffic. People familiar with the situation said Teligent would use the latest financing to expand in its existing U.S. markets while also entering cities overseas. |
