WASHINGTON-The D-, E- and F-block broadband personal communications services auction not only is the largest competitive bidding venture upon which the Federal Communications Commission has embarked to date, it also has spawned new players, regenerated old hands and created a few strange bedfellows.
In this issue and the next, RCR is offering a few vignettes of these 10-megahertz hopefuls via information gleaned from more than 2,000 pages of their aggregate Form 175s that, due to stricter scrutiny by the FCC, are almost as complete as a Form 600, a form only completed by winners.
Another Sprint
As an example of a major company competing in “disguise,” NewTelco L.P. in reality is Sprint and Sprint Spectrum Holding Co. The company, already a major force in wireless and wireline communications, is going after D- and E-block licenses. Disclosed in initial documents is its relationship with France Telecom and Deutsche Telekom; each will take a 10-percent voting stake in any properties NewTelco may win. TCI Telephony Services, Cox Telephony Services and Comcast Telephony Services, all subsidiaries of major cable TV interests, also are part of NewTelco’s mix. All hold pieces of other upcoming or established commercial mobile radio service licenses, and money here could be no object.
SprintCom Inc., a wholly owned subsidiary of Sprint Corp., also will bid on D- and E-block licenses. It, too, named France Telecom and Deutsche Telekom as affiliates. The bidder has entered into post-auction partnerships with Sprint Spectrum Holding L.P., Sprint Spectrum L.P., WirelessCo L.P., sister bidder NewTelco L.P., Sprint Enterprises L.P., U.S. Telecom Inc., TCI, Cox Enterprises Inc., Comcast Corp., TCI Telephony Services, Comcast Telephony Services, Cox Telephony Partnership and Cox Communications Wireless Inc.
Entrepreneurs
PCS America L.P. II of Hartford, Conn., boasts one of the most seasoned CMRS players in the country-Henry Zachs-an early entrepreneur who took cellular and specialized mobile radio by storm, and who has brought his family into the business. Zachs has formed limited partnerships with other CMRS interests to make a financial go of this auction to add to his telecommunications interests.
Wireless always has projected a certain degree of allure to non-telecom professionals, particularly to doctors. Many have won, built, operated and/or sold CMRS licenses in the past, and a few are participating in this last great PCS sale as well. MCG PCS Inc. president Dr. Michael Gelfand of Bethesda, Md., applied as a small business with rights to a 25-percent discount. Gelfand has other interests in broadcasting, music, sports and real estate along with 12 C-block licenses that are pending at the commission. Gelfand’s gross revenues for the past three years, taking into account all of his interests, average about $3.6 million; total assets of $11.8 million were reported.
Gelfand has contracted with The Richard Vega Group for bidding support services; Vega is providing such service to other bidders as well, including itself. Under the name RLV-PCS I Partnership, Richard Vega, who won two C-block licenses, and his partners are looking for licenses in all three blocks. Average small-business revenues for the group during the past three years were $17.5 million, and the company reported $87.4 million in total assets.
Vega also owns a piece of CM-PCS Partners of Oakland, N.J. Not only will it be providing the bidding services for this player in addition to the aforementioned applicants, Richard Vega and Richard Vega Jr. are partners and affiliates.
PowerTel
PowerTel Inc., a subsidiary of InterCel Inc. that used to be called InterCel PCS Services Inc., also is pursuing licenses in all three blocks. The company issued 35,747 units of a security last February to help finance the venture; most of the units were purchased by Bank of New York, Bankers Trust, Northern Trust and State Street Bank. Additional funds were raised in April through the sale of $360 million in senior discount notes; primary buyers included Bank of New York, Bankers Trust, Boston Safety, Chase Manhattan, Citibank and State Street Bank. PowerTel holds A- and B-block PCS licenses in several southern states.
Ericsson Inc. is an attributable stockholder of PowerTel by virtue of its 100-percent holdings of Series A preferred InterCel stock.
Big names
San Francisco-based CMT Partners, which applied to bid for two D-block and two E-block licenses, includes AirTouch Communications Inc. and AT&T Wireless Services Inc. as partners. Each owns more than 5 percent of CMT.
Long-distance provider, equipment seller and B-block PCS winner GCI Communications Corp. in Anchorage, Alaska, is going after a select few D- and E-block properties, but it has the backing of several giants. MCI Telecommunications Corp. is a stockholder, and it already owns two seats on GCI’s board. Bob Magness, TCI chairman, also owns GCI stock; TCI GCI Inc., a subsidiary of TCI,. holds three board seats.
Central Oregon Cellular Inc. had applied to bid as a small business with a 25-percent discount. Stockholders include Wayne Perry (10,000 shares) and John McCaw Jr. (8,000 shares). The bidder’s 1995 gross revenues totaled $13.4 million, with assets totaling $32.6 million.
Rivgam Communicators L.L.C., which started the auction off with a bang two weeks ago with high bids on two New York City D-and E-block licenses, counts as its principals Wall Street’s Mario Gabelli and TCI’s Robert Dolan. Gabelli himself is affiliated with several C-block winners, and he holds interests in other CMRS entities as well. GAMCO, which owns 100 percent of Rivgam, is owned 79.5 percent by Gabelli, who also owns majority interests in other Rivgam affiliates. The list of companies in which Gabelli and his companies own stock is too long to list.
Norwich Communications Inc., under the leadership of Richard Lubasch, is a wholly owned subsidiary of Cellular Communications of Puerto Rico. Norwich has entered into a joint bidding arrangement with Springfield PCS Inc. and Neff PCS Ventures for the course of the auction. There are no attributable investors in this bidder, although the parent company reported total gross 1995 revenues of $108.6 million.
Barry Lewis, a former General Cellular principal, has entered the fray again with Triad Corp., with plans to gain licenses in all three blocks. The company currently operated a rural cellular license under interim authority in Minnesota, and it holds pieces of other wireless companies in several other states.
Familiar faces
PC PCS Corp., run by Steven and Robert Price of PriCellular, has the backing of AT&T Wireless Services, but it has not entered into any joint auction ventures or any post-auction agreements.
AT&T Wireless PCS Inc., run by veterans Wayne Perry and Gerry Salemme, is bidding on D and E markets. Its comprehensive Form 175, when boiled down, mainly said that it had not formed any partnerships with other bidders.
Another heavy hitter back for a second try is NextWave Power Partners Inc., a sister to the C-block giant NextWave PCS Inc. Still calling itself a small business eligible for the 25-percent discount, the bidder appears to be looking for ways to fill out its nationwide footprint. The indirect partners remain the same, lead by companies formed by Allen Salmasi and Janice Obuchowski. Also making a second appearance are Pacific Rim investors, U.S. utilities and Qualcomm.
AllTel Mobile Communications, bidding on D- and E-block licenses, lists only two attributable shareholders in the huge operation-Stephens Group Inc. (8.81 percent) and Cincinnati Financial Corp. (6.91 percent). The company also reported an attributable interest in Horizon Telecom Inc., but will have no contact with that company during the course of the auction.
