William A. Wilson, chief financial officer of Arch Communications Group Inc. sees no threat to his company or the paging industry from the new personal communications competitors on the horizon.
“Our low cost buffers us from competition,” Wilson said. “It costs about $15 billion to get PCS licenses and will cost another $15 billion to build out the system. They (PCS providers) will need to charge significantly higher than the $6 to $8 a month we charge. No one’s coming after us for $6 to $8.”
In a presentation May 8 to the “Small-Cap Stock Conference” sponsored by Prudential Securities Inc., Wilson also predicted that narrowband wireless communications, “will become the (wireless) data highway of the future.”
Figures due out “imminently” will show that the number of pagers in service in the United States reached 30 million by year-end 1995, he said. “Looking ahead, there is a consensus view of 15 percent to 20 percent growth per year for the next several years, with 55 million to 75 million units in service by 2000.”
On a national basis today, average market penetration for paging is 11 percent to 13 percent, he said. “In our markets, we have 9 percent to 10 percent, so there is significant room for us to grow before we get into a market share mode.”
Arch, based in Westborough, Mass., provides paging services throughout the nation to nearly 2.2 million subscribers. It will add another 500,000 subscribers to its base when it closes its acquisition of Westlink Paging Inc., San Diego, later this spring. During the first quarter of 1996, Arch added 180,000 net new subscriber units, all through internal growth.
For the first quarter, which ended March 31, Arch reported earlier this month its net revenues reached $60.6 million, a 164 percent increase over the same period in 1995.
Nevertheless, Arch’s stock has been trading low relative to its 52-week high of $30.75 per share. Wilson said he believes that the fever-pitch pace of Arch’s development has confused investors. He also said that paging stocks in general, “follow long bond” rates, and that this is so regardless of any individual company’s underlying fundamentals.
Arch’s story may get easier to tell. Since it was founded a decade ago, it has acquired 35 paging companies. “We still have a rich deal stream, but the deal stream has slowed and we have become much more selective,” Wilson said.
