NEW YORK-LCC International Inc., an independent provider of radio frequency network design for wireless telecommunications, said it plans to go public by early autumn.
The road show for the 5-million-share initial public offering of Class A common stock was under way last week, and the issue could come to market as early as the end this month. Donaldson, Lufkin & Jenrette Securities Corp., New York, is lead underwriter of the planned IPO.
Headquartered in Arlington, Va., LCC was founded in 1983-as the Federal Communications Commission began issuing cellular system licenses-to develop, “a standard method of applying design engineering principals to wireless system design,” according to the company’s preliminary prospectus for the IPO.
“LCC believes that its 26.9 percent compound annual growth in revenues over the past five years has been fueled primarily by the growth of the wireless telecommunications industry,” the red herring said.
The company reported revenues of $104.5 million at year-end 1995, and $60.4 million in revenues June 30, the close of its second quarter. LCC also had $40 million in debt as of June 30, including a $20 million note held by MCI Telecommunications Corp. Prior to the IPO, LCC will assume repayment responsibility for another $30 million note held by MCI. The MCI notes, both due in 2000, are exchangeable for common stock, an exchange LCC said it intends to require in August 1997.
According to the report, LCC has provided services and products to seven of the largest cellular carriers in the United States, as well as large international cellular providers, including British Telecommunications plc, France Telecom Group and Mannesmann Mobilfunk GmbH in Germany. Nearly 40 percent of LCC’s 1995 revenues were derived from its international customers.
In the United States, companies building or planning to build personal communications services networks also are among LCC’s customers, including: AT&T Wireless Services Inc., Pacific Bell Mobile Services, NextWave Telcom Inc. and Pocket Communications Inc. LCC also provided a total of $11.5 million in financing to NextWave and Pocket, the two top C-block auction bidders for broadband PCS.
Enhanced specialized mobile radio operators, notably Nextel Communications Inc., as well as two-way messaging system companies, also are LCC customers, the company said. Nextel, which is LCC’s largest customer, accounted for 14 percent of its revenues last year.
LCC said it “also has established working relationships with two major telecommunications equipment vendors,” to which it serves as a subcontractor. It did not identify the two vendors in its preliminary prospectus.
However, among the risk factors cited in this disclosure document, LCC said, “wireless operators themselves and system equipment vendors also are developing capabilities competitive with those provided by LCC. Some of the company’s competitors are part of large corporate groups or alliances with greater resources and broader technology bases than those of the company. In addition, some of the company’s competitors have been founded by or have recruited senior engineering executives from current or potential company customers and may have better relationships with those current or potential customers than are available to the company.”
Competitive pressures are forcing LCC to lower the prices it can charge for its software tools and field measurement and analysis equipment, the document said.
