BellSouth Wireless Inc. sold the majority share of its Cellemetry Data Service to NumereX Corp.
Under the terms of the agreement, the two companies will form a joint venture called Cellemetry L.L.C., to which NumereX will make an initial in-kind cash contribution of $7.5 million and ongoing payments of up to $15.5 million during the venture’s first three years.
For its part, BellSouth will make an in-kind capital contribution of all assets related to the Cellemetry technology, the company said, including all Cellemetry Data Service patents, trademarks and contracts.
NumereX will have 60-percent control of Cellemetry L.L.C. and in turn majority control of Cellemetry Data Services, which provides data communications over existing cellular networks’ unused control channels. BellSouth will retain 40-percent control.
BellSouth said it wanted to find a partner that was focused solely on marketing telemetry products to customers. NumereX is a telecommunications company that develops and markets information transportation technologies on wireline, broadband and now wireless networks. The company’s strategy is to acquire businesses with transport technologies that complement its portfolio of services. Last year, the company acquired Broadband Networks Inc., State College,Pa., (not to be confused with Canada-based Broadband Networks Inc. acquired by Northern Telecom Ltd.), to obtain its EDCOMM fiber-optic design for broadband transport.
“With its strong emphasis on telemetry and its vision regarding the future of Cellemetry, NumereX is the perfect partner to help take BellSouth’s Cellemetry technology to a wider audience of potential customers,” said C. Stanley Hamm, group president of mobile systems for BellSouth.
While saying he didn’t think BellSouth neglected Cellemetry in any way, NumereX President Jack Reis said his company will give Cellemetry greater attention because it is focused more directly on transport technologies and exploiting the applications for such.
“This is our entire business. We don’t have any other diversions,” he said.
“Cellemetry as an activity in BellSouth is a very small portion of their overall position and received a small portion of administrative attention. In our business, it will be a significant portion of our business and receive a significant share of our attention.”
Reis said he first noticed Cellemetry through NumereX’s interests in Uplink Technologies, a security alarm monitoring system licensed to use Cellemetry. Reis said he was interested in pursuing other applications for the technology, but Uplink was licensed only for alarm monitoring. So he began talks with BellSouth to find a way for the two to work together.
“By joining, we’ll see a more attractive return.” he said. “We believe there are many, many other applications to put Cellemetry with and we believe we can together exploit that better.”
With Cellemetry a firmly established addition to its portfolio, Reis said NumereX plans to develop new applications for the technology and hopes to secure more contracts with cellular carriers to make the technology more available. Cellemetry Data Services has about nine application providers using Cellemetry for information transport purposes.
In particular, Reis said Cellemetry L.L.C. will pursue aggressively the area of mobile applications and the utility industry, but would not go into greater detail of the exact suite of uses under each category.
Reis said he chose Cellemetry over other telemetry technologies based on what he perceived as advantages in cost, reach and possible advantages.
“We have done extensive analysis of the marketplace vis a vis wireless short messaging service capabilities” with the help of outside consultants, he said. “We are convinced there is no other wireless technology on the short-term horizon that can offer the short message service capability on a ubiquitous basis that Cellemetry can.”
The deal is conditioned upon various agreements between the companies and the approval of both companies’ stockholders and the appropriate regulatory bodies.
