Enhanced directory-assistance provider Metro One Telecommunications Inc. said Sprint Nextel Corp. is terminating the master services agreement between Metro One and Nextel Operations Inc. effective Jan. 9. Nextel Operations is a subsidiary of Sprint Nextel following Sprint Corp.’s acquisition of Nextel Communications Inc. in August.
Metro One noted Nextel accounted for about 72 percent of its revenues for the first half of the year and 56 percent of its revenues for all of 2004.
In connection with the announcement, Metro One said it plans to accelerate its ongoing restructuring efforts to better align costs with revenues. The company said those efforts include winding down its customer-direct Infone service, as well as accelerating the closing of underused call centers and significantly cutting back on the number of employees and space at its corporate office. Metro One is working with Credit Suisse First Boston L.L.C. on its restructuring plans.
Metro One’s management tried to put a positive spin on what obviously is a major setback for the company.
“While we are very disappointed by this news, we appreciate the opportunity to have worked for Nextel for many years and are committed to protect as much shareholder value as possible during this transition,” said James Usdan, who was appointed president and chief executive officer of Metro One earlier this month.
Metro One’s stock hit a new 52-week low of 40 cents per share early Thursday. The company posted $20.1 million in revenues during the second quarter and has a current market capitalization of less than $12 million.
Metro One in August lost customer Alltel Corp., which represented more than 11 percent of its revenues during the first quarter of this year. The company also lost both AT&T Wireless Services Inc.-which accounted for 45 percent of its revenues during the first quarter of 2004-and Sprint PCS as clients in 2003. AWS since has been acquired by Cingular Wireless L.L.C., while Sprint began using EDA services provided by privately held Infonxx.
Metro One signed a multi-year agreement with rural operator Midwest Wireless last fall and announced last month that T-Mobile USA Inc. affiliate I Wireless had renewed a multi-year contract to receive its EDA services.
