After experiencing continual poor financial results, American Paging Inc. announced last month it would halt spending on narrowband personal communications services development to fix its core business. The company also may stop contributing financially to American Messaging Systems Inc., a joint venture between the company and Israel-based Nexus Telecommunications Systems Ltd.
“There is a possibility. We’re under discussions right now,” said Zvi David, senior vice president of business development for Nexus. American Paging declined to comment.
AMS announced in January that it was entering into the two-way paging market with an alternative to Motorola Inc.’s ReFLEX protocols using Nexus’ spread spectrum, frequency-hopping technology. The technology is used as an add-on return channel to existing one-way paging networks. AMS is exclusively marketing Samsung Telecommunications America’s TAG pager, which gives users basic acknowledgement functions plus the ability to send messages and communicate with other TAG pagers.
American Paging and AirTouch Paging are among the companies that have tested the Nexus technology. American Paging reportedly was leaning toward the ReFLEX 25 protocol for its five regional NPCS licenses.
Michael Elling, senior telecom analyst with New York-based Prudential Securities Inc., speculated that if American Paging were to suspend funding to AMS, it may not necessarily do so only because of financial reasons. Elling said American Paging’s management has shown greater interest in the FLEX protocols. “I think there’s a sense internally that they have to get their act together in the core business before they start expanding into new applications and services.”
A few carriers are expected to announce soon their plans to use Nexus technology, said Robert Stevenson, national director of sales for AMS. AMS has some financial help from Global Wireless Communications L.P. of New York. It entered into a letter of intent with Nexus in March to purchase $4.5 million in warrants exercisable into 3 million common shares of Nexus stock. GWC, through its affiliates, agreed to initiate commercial ventures to distribute Nexus products and services in a number of emerging countries and will invest up to $5 million in such ventures.
Adding to American Paging’s woes is the speculation that its parent company, Telephone and Data System Inc., may put the paging operator up for sale, an issue on which company President Terrence Sullivan declined to comment. TSR Paging Inc. reportedly is interested in purchasing the company.
“We don’t comment on rumor,” said TSR President Mitchell Sacks. But Sacks said TSR always is interested in acquisitions. Since its inception, TSR has grown only internally with no acquisitions except for spectrum. It holds a more conservative view and prefers not to be the highest bidder.
“If anyone is for sale, I would be interested,” Sacks said. “I’m interested in anything as long as the price is right.”
“I wouldn’t be surprised now” if TDS sold American Paging, said Perry Walter, vice president and telecom analyst for Robinson-Humphrey Co. of Atlanta. “I think the TDS family has gotten frustrated. They do need a lot of effort to turn the operation around.”
American Paging’s first quarter results reflected a 5.9 percent decrease in service revenue and a 4.3 percent decrease in customer units compared with the first quarter 1996. Net loss rose to $12.1 million from $5.3 million the previous year.
“Although we anticipated first quarter operating and net losses, our financial results demonstrate slight improvements in quarter to quarter trends,” Sullivan said in April. “I certainly don’t want to make too much of these improvements, but the key indicators of our business have been trending in the right direction over the last two quarters. Overall, I am not disappointed with our first quarter results. “
