NEW YORK-Let’s Talk Cellular and Wireless Inc., Miami, was scheduled to go public Nov. 21, raising funds to fuel its construction of new stores and its role as a consolidator of independent wireless retailers.
In an offering lead managed by Merrill Lynch & Co. Inc., New York, the company planned to sell 3 million shares of common stock priced between $14 and $16 each. Let’s Talk was operating 102 stores in 12 states, Washington, D.C., and Puerto Rico as of Sept. 30, the end of its fiscal year.
It has targeted regional shopping malls primarily and now has stores in 76 of the more than 1,000 such malls in the United States. The company plans to open 65-75 new stores this fiscal year and another 80-100 next fiscal year, both in new and existing markets, it said in initial public offering registration documents filed with the Securities and Exchange Commission.
Its strategy is to serve as a one-stop-shop location for consumers seeking to buy cellular, personal communications services, paging and satellite products, services and accessories. Each of its stores typically sells about 40 different makes and models of pagers and cellular and PCS phones, in addition to more than 1,000 stock keeping units of wireless products and accessories. It offers services from multiple carriers.
Let’s Talk also serves as a wholesaler to more than 1,000 distributors, carriers and smaller independent retailers. Last fiscal year, sales per individual store averaged $500,000. Revenues come from four primary sources: retail sales; activation commissions from carriers; residual payments and wholesale sales.
“The company recently made a strategic decision to accept increased activation commissions from carriers in certain markets in lieu of monthly residual payments to optimize cash flow and facilitate the company’s growth strategy,” according to the preliminary prospectus for the stock sale.
Its expansion plans are designed to take advantage of what it sees as a trend away from traditional direct sales of wireless services through telemarketing, direct mail, direct sales forces and retail outlets owned by carriers.
“As cellular and wireless services have become more affordable, the market has expanded significantly and shifted to a broader consumer base,” the company said in its IPO red herring.
“[We] believe carriers will seek multiple points of distribution, like [our] company, their own retail outlets, which don’t always offer more than one carrier’s service, and big box electronics retailers.”
Let’s Talk’s strategy is to offer the large selection and low prices of big box retailers with “the superior customer service and upscale shopping experience characteristic of a specialty retailer.”
The company is focusing its addition of stores first “on the largest and fastest growing wireless markets in the United States by targeting additional mall and `power strip’ locations,” it said.
The wireless retailer market in major metropolitan areas is characterized by numerous independent specialty realtors, the company said. To some degree, Let’s Talk plans to change that state of affairs through acquisitions. In June, it acquired Telephone Warehouse, which it said is one of AT&T Wireless Services Inc.’s largest retailers in the Southwest. It recently entered into definitive agreements to acquire Cellular USA, one of AT&T Wireless’ largest agents in Las Vegas, and Cellular Unlimited Corp., one of Cellular One’s largest agents in upstate New York. The latter acquisition, at a price of $2.3 million, will close with the consummation of the IPO.
Additionally, Let’s Talk said it plans to invest in information systems and a management team to manage its rapidly growing business.
