NEW YORK-In its inaugural quarterly teleconference with the investment community, Omnipoint Corp. announced Jan. 31 the second straight year of losses but also numerous milestones passed en route to deployment of its personal communications services network.
The Arlington, Va., company, which went public last year, reported a loss of $126.9 million, or $2.71 per common share, for 1996. For 1995, the company recorded a loss of $37.8 million, the equivalent of 96 cents per common share of stock. Revenue for 1996 was $531,000, all associated with the limited launch late last year of the New York Global System for Mobile communications PCS network by Omnipoint Communications Inc., the New Jersey-based operating company of Omnipoint Corp.
Some 25 cents per common share of last year’s losses are attributable to an $11.9 million charge the company took on inventory write-down to reflect lower replacement costs of handsets. But this news isn’t all bad, said Bradley E. Sparks, chief financial officer of Omnipoint Corp. GSM handset prices “have gone from the high $300s to the low $300s, and continue to go down,” he said.
George Schmitt, president of Omnipoint Communications Inc., also said that he expects three handset manufacturers to have available later this year, the United States GSM versions of a so-called smart phone similar to the Motorola Inc. StarTac: Motorola, Mitsubishi Wireless Communications Inc. and Ericsson Inc. All will be small and lightweight, have about six hours of talk time and at least 100 hours of standby time, he said. The Ericsson model also will feature an easier-to-read large-print size on its screen for users who want detailed information like stock quotes on their handsets.
Sparks said Omnipoint closed out 1996 with $1.4 billion in assets and won’t need to tap the capital markets this year. Ericsson and Northern Telecom Ltd. just agreed to “increase their exposure to us” by an additional $750 million in vendor financing, and “we are still talking to other vendors,” Sparks said.
That brings the total vendor financing commitments to date to $1.3 billion. “That’s 150 percent financing, or $1.50 for each $1 of equipment, and we have used none of it so far,” said Douglas Smith, president of Omnipoint Corp. “To be offered handset vendor financing is extremely unique.”
Omnipoint has the flexibility to contribute up to 20 percent of that financing to outside partners it anticipates joining forces with to build out more rural areas-a longer term goal.
Omnipoint Communications’ launch in the New York metropolitan area began in full, commercial earnest in early January, Schmitt said. As of Jan. 31, the carrier had cleared 270 working base stations in New York City proper and the surrounding counties of Nassau and Westchester in New York and Bergen in New Jersey. By summer, Omnipoint expects to have extended coverage on Long Island through both Nassau and Suffolk counties to tap the lucrative potential of a popular vacation destination.
This week, Schmitt said he expects construction to start on the first base station in Philadelphia. About 100 are needed to deploy the city itself and another 175 to launch the surrounding metropolitan area, including portions of southern New Jersey. A full-scale summer launch is anticipated, he said.
Omnipoint’s Boston rollout could begin in early 1998, “assuming we get our licenses, and there is nothing to suggest we won’t,” Schmitt said.
Total buildout costs for all of its networks are likely to fall well within the $17 per population equivalent average the company originally projected, Sparks said.
Meanwhile, Omnipoint is working on roaming agreements. Overseas, it has agreements in place with Germany, Switzerland and the United Kingdom, and another 40 are “in process,” Schmitt said. Omnipoint’s international roaming rates are competitive with those of wireline long-distance carriers, he added.
