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Tuesday, June 4, 2002 |
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• Charter signs on another VOD partner • Microsoft offers bargain-priced Net TV • comMATCH, Vyyo team for IP telephony • Universal Broadband snatches up UIS • Metromedia Fiber likely to unravel • Nortel eyes $800M through equity sale Charter signs on another VOD partner Charter Communications Inc. is not letting the Diva Systems bankruptcy filing slow down its video-on-demand push, the MSO has signed up nCUBE Corp. as one of its VOD equipment vendors. As part of the deal, Charter has installed nCUBE equipment in six markets, including Birmingham, Ala.; Fort Worth, Texas; Newtown, Conn.; and Glendale, Long Beach and Pasadena, Calif. Financial terms were not disclosed. Charter is using nCUBE equipment, including the nABLE On-Demand management system, nODA, which enables operators to customize user guides and the n4 and enhanced n4x servers. In April, Charter announced a deal with another VOD system vendor, Concurrent Computer Corp. -- the deal marked the end of its exclusive VOD agreement with Diva Systems Inc. Charter is using Concurrent's MediaHawk VOD system in markets where it delivers VOD services over the Motorola platform. Thus far, Charter has installed and tested the equipment in Asheville, N.C.; Duluth, Ga.; Greenville/Spartanburg, S.C.; Hickory, N.C.; Slidell, La.; and St. Louis, Mo. Charter says it began shopping for new VOD vendors when Diva's troubles began to surface several months ago. Last Wednesday, Diva filed for Chapter 11 bankruptcy protection. Interactive program guide provider Gemstar-TV Guide International has agreed to acquire Diva’s software and technology assets as part of a pre-packaged bankruptcy deal. Related stories:
Microsoft offers bargain-priced Net TV Since Microsoft Corp.'s UltimateTV interactive television service was not embraced by the public as quickly as it had hoped, the software giant is taking another tact. Microsoft is rolling out a low-cost, watered-down service that will give subscribers access to the Net via their TVs for as little as $9.95 a month. The service is available via a newly released MSN TV Internet receiver, which enables users to access the Internet from their television sets using a wireless keyboard or remote control. The MSN TV receiver, manufactured by Thomson RCA, retails for $99, offers two subscription plans. For $9.95 a month, users subscribe to the Economy plan, which includes five hours of Internet access, and an option to purchase additional hours at $2.95 a pop. For unlimited access, subscribers will have to fork over $21.95 a month. To entice potential and existing MSN Internet access subscribers, Microsoft is offering two months of free MSN TV to users that purchase the receiver by August 31. In January, Microsoft announced plans to restructure its UltimateTV division, and fold it into a television services group within Microsoft's MSN division. At the time, the company said it was eliminating roughly one-third of jobs related to its UltimateTV group. Related story:
comMATCH, Vyyo team for IP telephony comMATCH and Vyyo Inc. have partnered to enable wireless service providers to complete with wire-line carriers in the IP telephony sector. The telephony over fixed broadband wireless system is based on comMATCH's Duet VoIP gateway designed to interconnect the fixed broadband wireless IP access network to legacy Class 5 telephony switches. The Duet VoIP gateway enables the provisioning of various voice services, including three-way calling, call forward, call waiting and caller ID. "By offering high-speed data and telephony services on the same platform, a service provider is able to increase his revenue potential as well as compete effectively with wire-line carriers," Vyyo director of marketing Sanjay Nagpal said in a statement. Vyyo's systems are based on the IP used for data transport over wireless networks. Related story:
Universal Broadband snatches up UIS Looking to boost its presence in the voice over IP sector, Universal Broadband Communications has snagged Universal Information Systems for an undisclosed amount. Under the terms, Universal Broadband will acquire UIS's base of roughly 10,000 prepaid customers and the company's switching network -- an Excel switch in Los Angeles and a Cisco 5300 router in Tehran, Iran. Universal Broadband went after the international prepaid communications provider because of its large customer base and "strategically located switches," says Mark Ellis, Universal Broadband's CEO. "UIS has done an outstanding job penetrating the international marketplace, specifically throughout the Persian community. This penetration will be extremely beneficial to UBC as we prepare for the public market," Ellis says. The UIS buy is part of Universal Broadband's grand plan to purchase telecom assets to accelerate its VoIP efforts. In April, the telecom provider bought the assets of Monarch Communications, a telecom services reseller. In October 2001, the company snatched up certain assets of Norstar Communications, a privately held voice and data services provider. Related story:
Metromedia Fiber likely to unravel Copyright 2002 The Deal L.L.C. Bankrupt Metromedia Fiber Networks Inc. is preparing to begin negotiations this week with its creditors and bank lenders to eliminate more than $ 4.5 billion in debt through the sale of unprofitable parts of its fiber-optics business. Rather than emerging from bankruptcy, as much as it looked May 20 when it filed for Chapter 11 protection, the White Plains, N.Y., company is more likely to sell parts of its broadband business that keep losing money while retaining pieces that generate a positive cash flow. Companies such as McLeodUSA Corp. and ICG Communications Inc. have executed similar plans, reshaping themselves into smaller companies, but able to finance their debts. Sources close to Metromedia Fiber's bankruptcy process
said that while other telecommunications carriers have expressed
interest in parts of the broadband provider's network, all have
stopped well short of bidding for the entire company. "Because capital markets have all but stopped funding
investments in telecommunications, companies and investors that
might still be interested in Metromedia are going to have a very
difficult time raising the money to do a deal," said Vince Tobkin,
a Bain & Co. telecom banker. If, as expected, Metromedia Fiber attempts to convince its bank lenders, led by Citicorp USA, and bondholders such as Verizon Communications and Goldman, Sachs & Co., to a debt-for-equity restructuring, the company would likely have to raise new money to continue operating until its business became profitable. But Metromedia Fiber has never been profitable and with more companies building and leasing fiber-optic lines in metropolitan areas, it has many more competitors than in past years. More broadband capacity combined with less demand for telecom services has produced lower rates across the industry, making revenues even harder to generate. "It's not clear that Metromedia Fiber has any assets that it can leverage into significant revenue anytime in the next three years," said Tom Nolles, president of CIMI Inc., a telecom consultancy in Voorhees, N.J. "The company needs to be acquired, but who is going to buy it when it has a such a large debt?" One possible suitor is Verizon, which owned 6.6 percent
of the company's equity and continues to use parts of its network.
But Verizon is more likely to buy only select pieces of Metromedia's
national network. A Verizon spokesman would not comment on the
company's plans. For Metromedia Fiber, any restructuring plan will require winning back the confidence of its original investors, a group that agreed in October to participate in a funding package that was supposed to stave off bankruptcy. Just three weeks after Sept. 11, Metromedia Fiber succeeded in convincing a coterie of big-name investors to give $611 million in cash and credits to fund the fiber-optic provider's growth and operations. Though the negotiations often seemed on the verge of collapse, investors ultimately put aside their jitters about the market in general and telecommunications in particular to support Metromedia Fiber. One big reason Citicorp USA, Verizon and Nortel Networks Ltd. elected to back Metromedia Fiber was the reputation and deep pockets of the company's billionaire controlling partner, John Kluge. As the public face of Metromedia Fiber and owner of a 26 percent stake, Kluge agreed to purchase $180 million in convertible debt as part of the financing package. But even with fresh funding and a new management team, Kluge's Metromedia Fiber stumbled throughout the winter, unable to make a series of interest payments on existing debt. In May, the company was forced to file for bankruptcy, a move that left some of its earlier investors sour. This spring, Salomon Smith Barney Inc., like Citicorp USA, a unit of Citigroup Inc., resigned as the company's financial adviser and UBS Warburg replaced it. Kronish Lieb Weiner & Hellman LLP was hired as the company's legal adviser. In March, Verizon and its Internet transport affiliate, Genuity Inc., terminated contracts with Metromedia Fiber. With telecommunications still an uncertain investment, the same investors that contributed to the company's fall financing package are taking a more jaundiced view of Metromedia Fiber. Much attention is certain to focus on whether Kluge decides to take a greater financial role in the company's future. "Unless Kluge tries to be a stalking horse, who's going to give them money after the way they treated Wall Street?" asked Vik Grover, a telecom analyst at Kaufman Brothers LP. "The company could very well end up being divided into many pieces." Chadbourne & Parke LLP is representing Metromedia's
creditors committee; Clifford Chance Rogers Wells of Washington
is representing the bank group. Related stories:
Nortel eyes $800M through equity sale Copyright 2002 Sun Media Corporation Nortel Networks plans to raise $800 million through the sale of equity, the telecom equipment maker announced yesterday after markets closed. Nortel said it would use the proceeds from the equity offering for general corporate purposes or to invest in its subsidiary companies. Last month, the company asked regulators to let it raise as much as $2.5 billion through debt and equity issues over the next two years. Nortel said last week it had begun two concurrent public offerings consisting of equity units and 150 million common shares. Canada's largest hi-tech company has been hit hard by a sharp decline in capital spending by telephone companies and Internet data carriers. Sufficient Cash However, Nortel insists it has sufficient cash and credit available to weather the telecom downturn. Nortel's shares on the Toronto stock market closed down 2 cents at $3.23 yesterday. Related stories:
• S-A ships one-millionth GainMaker amplifier • DivXNetworks snags $6 million • Verizon discounts high-speed access service
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