Confirming rumors that have been circulating for weeks, Teligent LLC announced that Nippon Telegraph and Telephone Corp. of Japan has agreed to make a $100 million strategic investment in the company.
Teligent’s parent companies, The Associated Group Inc. and Digital Services Corp., will invest another $60 million as well, 55 percent of which will come from Associated group and the remaining 45 percent from Digital Services. The phone, data and Internet-service company, led by former AT&T Corp. president Alex Mandl, said these investments will allow his company to more effectively compete with the Baby Bells in the local phone service business. He also said the new cash will significantly bolster the company’s wireless endeavors.
“These investments, totaling $160 million, will hasten our efforts to bring the benefits of our digital microwave networks … to customers looking for affordable broadband services,” he said.
NTT will add a director to Teligent’s board, and will receive a 12.5 percent equity interest in the company. The Associated Group also will add a director, bringing total board membership to seven.
The Japanese telecom giant, one of the largest in the world, benefits further by gaining a foothold in the American telecom market, clearing the way for an independent phone service between countries. As competition in the communications market becomes increasingly global in nature, telecom players have been leering at each other like patrons at a singles bar, hungry for international mergers to solidify their global competitiveness.
Teligent has plans to begin offering its telecom services in the New York market and three other large cities by the end of the year, with an overall goal of 30 markets by 1999 and, eventually, half the country’s population.
To gain further revenue in excess of these investments, Teligent has announced its plans to file an initial public offering of stock and debt with the Securities and Exchange Commission. This IPO, which the company expects to file soon, could bring in yet another $100 million. Officials at Teligent would not comment further on the matter.
NTT will split its investment in two phases: a $40 million initial investment and the remaining $60 million when Teligent opens its IPO. The second phase of the investment is completely independent of the IPO.
While the U.S. government is still in telecom trade talks with Japan, in particular over a foreign procurement accord, the NTT investment does not appear to break any foreign ownership laws, as its involvement remains under the 25 percent limit.
