Boasting higher revenues and a reduction in subscriber
churn, MMDS operator Heartland Wireless Communications Inc. said last week that its
operational recovery is complete.
According to chairman and CEO Carroll McHenry,
fourth-quarter 1997 proved to be the turning point for wireless cable company Heartland.
Its revenues for the quarter increased by 17 percent over year-earlier figures, to $20
million. Net loss for the quarter was down to $29.4 million, and the company saw positive
operating cash flow for the period.
McHenry told investors during a conference call last Monday
that Heartland has reduced subscriber churn every month since June 1997, "although it
remains unacceptably high." He said churn has been reduced from 4.6 percent in 1997
to 3.6 percent, with a goal of 3 percent per month.
But McHenry predicted that Heartland would need between $30
million and $40 million for the fiscal-1998 business plan, depending on how many markets
the company builds out. Heartland also needs capital to service debt payments due in April
and October. The company has about $240 million in high-yield debt.
Late last month, Heartland retained Wasserstein Perella to
analyze and suggest financing options.
"We could face a liquidity issue around the October
time frame," McHenry admitted, adding, "We'll make sure that we don't
face that unnecessarily."
As part of a five-year business plan, McHenry outlined
several businesses that Heartland would pursue. The company will rebuild its
single-family-home wireless-video business with the help of a new marketing campaign in 33
of its 57 markets. The company will also begin to build out as many as six new markets
where it has acquired MMDS spectrum.
McHenry expects much of the company's 1998 growth to
come from a deal struck last year to deliver DirecTv Inc. programming to MDU
(multiple-dwelling-unit) properties in all Heartland markets.
Heartland also plans to start tests on wireless data and
voice-telephony services this year.