NEW YORK-Advanced Radio Telecom Corp., a Bellevue, Wash., a provider of fixed-wireless broadband data networks, will receive a $251 million equity infusion from a group of investors led by Qwest Communications International Inc.
Denver-based Qwest is building an 18,500-mile domestic Internet Protocol, fiber-optic network for data, voice and image communications. It will provide $90 million of the total investment in ART under the agreement the companies announced June 1.
“Morgan Stanley, our adviser, said this is one of the largest, if not the largest, private equity infusions in a development-stage company,” Henry C. Hirsch, chairman and chief executive officer of ART, said during a teleconference.
According to the agreement, ART will provide Qwest with local broadband wireless capacity and Qwest will be ART’s exclusive provider of network backbone. The two companies also will collocate equipment and coordinate joint marketing initiatives to businesses.
ART currently offers commercial wireless Internet services to businesses in Seattle, Phoenix and Portland, Ore. The capital investment will allow ART to accelerate its network deployment to cover 40 of the top 50 markets in the nation within two years, Hirsch said. ART owns 38 GHz licenses for 200 markets.
Besides capital, Hirsch added that, from a regulatory perspective, fixed-wireless carriers need “the same access to multi-tenant buildings as the Bell companies had for many years.”
In those cities where ART offers service, it has signed nonexclusive master agreements, which give it access to hundreds of buildings. However, landlords recognize the value of access and are bargaining accordingly, Hirsch said.
Besides Qwest, other members of the investment group are: Oak Investment Partners, $40 million; MeriTech Capital Partners, $25 million; Advent International and Columbia Capital, $20 million each; Accel Partners, Brentwood Venture Capital and Worldview Technology Partners, $15 million each; Bessemer Capital Partners, $8 million; and Adams Capital Management, $3 million.
Last year, WinStar Communications Inc., a New York-based holder of 28 GHz and 38 GHz licenses, purchased a 13-percent equity stake in ART.
“Spectrum is a rare commodity, and the more we have the better. ART has some, and I want it,” William J. Rouhana Jr., WinStar’s chairman and chief executive officer, said at a conference last November, during which he shared the dais with Hirsch.
“There are a lot of issues (at present) that keep us from going further,” Rouhana said, adding that WinStar intended its investment in ART to be strategic and for the long haul.
Asked June 1 whether the Qwest-led investment just announced meant ART had officially spurned WinStar as a corporate suitor, Hirsch offered this response: “WinStar is a fine company, but I wouldn’t even compare it to Qwest, which is a global [interexchange carrier] with tremendous reach,” he said.
“Perhaps I misinterpreted [Rouhana’s] intentions.”
Lucent Technologies Inc. obtained a 3.3-percent stake in ART as a condition of vendor financing it provided. Lucent is entitled to retain that equity after ART repays its debt to Lucent.
“We will have a variety of technologies and companies (as suppliers),” Hirsch noted.
