Sprint Corp. continued its acquisition binge in the
wireless cable market, agreeing to purchase VideotronUSA and Transworld Telecommunications
Inc. in deals valued at $210 million.
Sprint agreed to purchase 100 percent of the outstanding
capital stock of VideotronUSA, a subsidiary of Montreal-based Le Groupe Videótron Itée,
for $180 million. The long-distance carrier will also purchase Transworld for $30 million.
VideotronUSA owns wireless licenses covering 6.4 million
homes in Tampa, Fla.; and Greenville, S.C. The company also owns a majority interest in
licenses for San Francisco, San Jose, Victorville and Greely, Calif.; and Seattle and
Transworld owned the minority interest in the California
and Washington licenses.
The acquisitions must be approved by the Federal
Communications Commission and the U.S. Department of Justice, which is expected to take
four to six months.
The transactions come on the heels of two other wireless
deals Sprint made in April -- its acquisition of 49.997 percent of People's Choice TV
Corp. (PCTV) for $151 million, and its outright purchase of American Telecasting Inc. for
$448.8 million in cash and debt.
Those deals boosted Sprint's wireless cable (or
multipoint multichannel distribution service) footprint to 17.8 million homes. The
addition of the VideotronUSA and Transworld properties increases its number of homes
passed to 24.2 million.
In 1995, Pacific Telesis Group, parent of Pacific Bell,
tentatively agreed to buy the VideotronUSA and Transworld frequencies for $160 million to
$175 million. But that deal fell through in late 1996, after SBC Communications Inc.
agreed to buy PacTel.
Sprint isn't the only LDC interested in wireless
spectrum: Last month, MCI WorldCom purchased CAI Wireless Systems Inc., an Albany,
N.Y.-based wireless cable company, in a cash and debt deal valued at $476 million, and it
is believed to own debt positions in several other wireless cable companies.
Both Sprint and MCI have been showing a keen interest in
MMDS spectrum over the past year. Both LDCs are interested in the spectrum as a means to
bypass incumbent local-exchange carriers for local and long-distance services.
Sprint has been rumored to be looking at equity investments
in several wireless cable companies for about a year. However, the company hadn't
made any moves until late in March, when MCI began buying up bond positions in several
wireless cable companies, including PCTV.
And it appears that the acquisition binge may not be over:
There are still several wireless cable companies -- including Nucentrix Broadband Networks
Inc. (formerly Heartland Wireless Communications Inc.) and Wireless One Inc. -- which
could be the target of either or both LDCs.
Sprint plans to use the wireless spectrum for its
Integrated On-Demand Network, or ION, a high-speed Internet service for business and
residential customers. ION is scheduled to roll out in 35 cities later this year.