Teligent Inc. got the reprieve it was hoping for last week when several of its creditors agreed to grant the local multipoint distribution service carrier a waiver to an amendment and consent to credit agreement, providing an extension until May 15. But Alex Mandl, Teligent’s chairman and chief executive officer as of April 30, is no longer with the company, having been replaced by Yoav Krill, the managing director of IDT Corp.’s European division.
IDT Investments Inc., a subsidiary of IDT Corp., also said it would increase its stakes in various affiliates of Hicks, Muse, Tate & Furst Inc. to increase its investments in Teligent and telecommunications company ICG Communications Inc. The Hick Muse affiliates currently own 219,998 shares of Teligent’s series A convertible preferred stock. IDT purchased 33.7 percent of Teligent, previously held by AT&T Corp.’s Liberty Media group, on April 17 as well.
Teligent’s creditors include Chase Manhattan Bank, Goldman Sachs Credit Partners and Toronto Dominion Bank. The amendment originally required Teligent to deliver definitive documentation with respect to vendor financing in an aggregate amount of at least $250 million, and convertible notes in an aggregate amount of at least $100 million, no later than April 30.
Teligent said if it does not meet the new deadline, “there can be no assurance that it would be able to obtain any additional waivers under the credit agreement.”
Last Wednesday, Teligent requested a hearing before a Nasdaq listing qualifications panel to ask for continued listing of the company’s stock on Nasdaq. The stock’s 52-week high of $40.13 was reached May 2, 2000, a year ago to the day of the hearing request, and dipped as low as 25 cents per share on April 3 this year. Shares of Teligent were trading at 68 cents at RCR Wireless News press time.
The hearing request follows Teligent’s receipt of a Nasdaq staff determination on April 25, indicating the company had failed to maintain a minimum bid price of $5 per share over the previous 30 consecutive trading days, which Nasdaq requires of all companies wishing to be listed.
Teligent’s brush with disaster is a familiar occurrence of the past six months, as the stock market continues to slash the value of companies everywhere. The wireless broadband sector was particularly hard hit, losing two LMDS carriers to bankruptcy, and significantly impacting the revenue margins and deployment schedules of various other carrier-dependent companies.
With all that has happened to negatively impact the industry lately, it seems things can only get better from here. But can they?
“We continue to believe that the fixed-wireless sector has inherent advantages that will allow it to regain all of its vitality,” said Andrew Kreig, president of the Wireless Communication Association International. “I don’t know how long this dormant period will last, but clearly there is going to be a restructuring of business plans. We hope that too much market share is not lost through this transition period … .”
Kreig thinks the flexible architecture of fixed-wireless technologies and rapid deployment will aid the industry in its recovery. Grass roots, area-by-area expansion of carriers’ networks also should help patch the wounds, according to Richard White, wireless infrastructure research analyst with Aberdeen Group Inc. in Boston.
White cited widespread overenthusiasm, reminiscent of the dot-com craze, as a major contributing factor to wireless broadband’s struggles.
“Carriers were building out their networks because the money was there, but they weren’t catching actual customer revenues. They were putting off what was going to happen until tomorrow, without really looking at their networks,” White said.
“Once you have a network up and going, the money can start flowing in, but the upfront costs to cover any kind of network … is an expensive proposition,” White added.
Subscribers can expect to see Teligent and others sticking to the service offerings they already have, and enhancing the customer experience using what is available to carriers right now.
License-exempt frequencies also will continue to be an inexpensive alternative. Unlicensed carriers already are successfully serving those subscribers dumped by bankrupt LMDS and digital subscriber line service providers.
