Partner at $15 per share-not too exciting...BUT
OMPT needs $$ build-out Chicago, and get market share in existing markets and thus might have to sacrifice a few $$ on the share price in the short-term.
But maybe to the patient investor-having NY, Phily, Miami, Boston, Detroit, and Chicago (and others) coverage could be worth alot more in a year or two.
Thursday February 18, 9:18 pm Eastern Time
Omnipoint decision on partner seen soon - analysts
NEW YORK, Feb 18 (Reuters) - Omnipoint Corp.'s (Nasdaq:OMPT - news) discussions with potential strategic partners have dragged on for months, but some analysts expect the wireless telephone service provider to reach a decision before next month's re-auction of certain phone licenses.
Omnipoint has said since November it was in talks with potential partners. The company originally held talks with as many as 15 parties, but now is in discussions with ''several'' telecommunications companies on the possibility of selling an equity stake of at least 20 percent.
Analysts said a strategic partner could pay about $15 a share for a minority stake in the Bethesda, Md.-based wireless company. Omnipoint's stock closed on Thursday at 11-3/8, down 5/16 in trading on Nasdaq.
Securing a partner before the March 23 wireless license re-auction would give Omnipoint more money to use in bidding, analysts said. A potential partner would gain a say in which licenses Omnipoint pursued, analysts said.
''I would think they would try to reach a decision sooner rather than later. The auction is a logical target date for some sort of decision,'' said one wireless telecommunications analyst who declined to be named.
Wall Street has long viewed the company as an likely takeover or partnership candidate because of its lucrative East Coast market and the shrinking number of independent wireless companies.
Omnipoint's East Coast market would be attractive to a European carrier wanting a foothold in the United States, analysts said.
The most likely candidates include Germany's Hutchinson or Mannesmann AG (quote from Yahoo! UK & Ireland: MMWG.F). Vodafone Group Plc (quote from Yahoo! UK & Ireland: VOD.L), which plans to buy AirTouch Communications Inc. (NYSE:ATI - news), could also pursue Omnipoint as an alternative to broadening AirTouch's existing alliance with Bell Atlantic Corp. (NYSE:BEL - news), some analysts said.
Domestically, SBC Communications Corp.(NYSE:SBC - news), which recently bought Comcast Corp.'s cellular phone operations, or MCI WorldCom Inc. (Nasdaq:WCOM - news) could emerge as suitors. analysts said.
MCI WorldCom, the No. 2 U.S. long-distance company, does not have any wireless properties and may be more interested in a company such as Nextel Communications Inc. (Nasdaq:NXTL - news), which would give it an immediate national presence, analysts said.
But Omnipoint is less attractive than it was a year ago, some analysts said.
''Their performance has not matched up to what people thought it would,'' said one analyst who declined to be named.
''They are attractive because of the markets they own, but they have not created a lot of value in those markets..They have no brand name recognition, they're highly leveraged, poorly managed, there's high churn. But a new partner could come in and turn that around,'' the analyst said. The term ''churn'' refers to customer turnover.
Shares of Omnipoint have fallen 59 percent over the past 12 months and have dropped about 62 percent from its 52-week high of 30 in April 1998. The stock hit a low of $4.625 in October 1998.
Omnipoint posted a larger-than-expected third-quarter loss and analysts expect the company to post a loss of $3.27 a share in the fourth quarter, compared with a reported loss of $2.29 a share a year ago, according to First Call.
The company, however, posted strong subscriber gains in the fourth quarter, adding 102,000 net new subscribers. Omnipoint had 375,000 subscribers at the end of 1998 and pushed that number past 400,000 in January. |
