InterCel Inc. has amplified its ability to penetrate the personal communications services business by successfully completing a $315 million combined offering of stock and debt, buying out its partners in the Powertel partnership and getting a hand into the C-block auction.
The West Point, Ga., company operates cellular networks in Georgia, Alabama and Maine. Powertel PCS Partners L.P. holds three PCS licenses at 1.9 GHz covering 9 million pops in the major trading areas of Memphis, Tenn., Birmingham, Ala., and Jacksonville, Fla. Commercial launch in some areas is scheduled for October.
InterCel earlier this month completed an offering of 7 million shares at $16.50 per share, raising $115.5 million in gross proceeds. The company also raised $200 million in debt securities; the company first offered $150 million then increased it when the offer proved attractive.
InterCel plans to use part of the money to build the Powertel PCS network, which will cost about $214 million, said Robert Mills, InterCel’s vice president, treasurer and strategic planner. Some proceeds will be used to fund capital expenditures for the company’s cellular systems.
InterCel last week issued 9.7 million common shares of InterCel stock to buy the rest of the Powertel partnership. Powertel originally was held 40.2 percent by Scana Corp., a South Carolina public utility company, with a $53 million investment-hence the name Powertel-and 20.9 percent by ITC Personal Communications Inc. InterCel’s investment of $20 million in Powertel gave it 13.4 percent interest; another 13.4 percent was held by the South Atlantic PCS Corp. venture capital fund, and other interests were held by four smaller partners.
“(The acquisition) was more economical and made sense. InterCel is an existing company with management,” Mills said. And a public company like InterCel could better raise the money needed to build a wireless network, he said.
Ericsson Inc. recently signed an equipment agreement with InterCel to provide Global System for Mobile communications infrastructure. The use of Powertel as a brand name is still being discussed, InterCel said.
InterCel has acquired some of the 500 sites it needs in its 66,000-square-mile PCS license area. The company expects Phase I of construction to continue through December of 1997, although a significant part of the network should be ready for launch this October.
InterCel also is participating in the ongoing C-block PCS auction through LITC Inc. The LITC partnership is led by ITC Holding Co., which holds 27.5 percent of InterCel. InterCel is managing the auction, and plans to build and manage the C-block PCS properties for a 10 percent carried interest, Mills said.
