Western Wireless Corp. said it is considering spinning off its 80.1-percent ownership interest in its personal communications business VoiceStream Wireless Corp. to its shareholders on a tax-free basis.
The company, which owns mature and profitable cellular properties, said it filed a request for ruling with the Internal Revenue Service as to the tax-free nature of such a spin-off.
“It’s a great way to expose the hidden value associated with a part of the company that is in a different phase of its business maturity,” said Timothy O’Neil, analyst with SoundView Financial Group in Stamford, Conn.
Perry Walter, analyst with Robinson-Humphrey Co. in Atlanta, said a spinoff not only would unleash shareholder value, but would position the company for acquisition opportunities later.
“Down the road, there could be more opportunities for the company to be more aggressive on the cellular side for acquisitions or for a buyout,” said Walter. “The PCS side would blend well for a consolidation of GSM players over time.”
The company recorded revenues of $157.6 million for the third quarter, up 50 percent compared with the same quarter a year ago. The company posted a net loss of $49.7 million, or a basic loss of 65 cents per share, for the quarter, down from a net loss of $68 million, or 97 cents per share, for the same period in 1997.
Revenues for the first nine months of the year totaled $413 million, compared with $267 million for the first nine months of 1997. Net loss was $167 million, or $2.20 per share, compared with $193.2 million, or $2.76 per share, for the same period in 1997.
For the quarter ended Sept. 30, the company recorded 620,300 cellular subscribers, a 45.5 percent increase from the same quarter in 1997. Cellular net additions were 37,000 for the quarter, including 4,800 from an acquisition. Cellular service revenues totaled $107.2 million.
At the end of the third quarter, Western Wireless added 264,800 PCS subscribers, an increase of 162.2 percent from the same quarter of 1997. PCS net subscriber additions were 52,200 for the quarter. PCS service revenues were $34.4 million compared with $16.2 million the previous year.
