More than a year after Arch Communications Group Inc. first offered to buy MobileMedia Communications Inc., the merger between the two companies has been completed.
The result is the second-largest paging carrier in the country, with 7.1 million subscribers and pro forma revenues and cash flow of $790 million and $250 million, respectively. It also closes the book on MobileMedia’s almost three-year existence in Chapter 11 bankruptcy protection.
“I am extremely pleased this whole thing has come to an end after so many months,” said Ed Baker, Arch chairman and chief executive officer. “I feel it will be good for both the companies as well as the industry in general. It was well worth the wait.”
With the acquisition journey behind him, Baker said he is eager to set foot on the new road that lies ahead.
“First and foremost, we need to focus on integrating our two companies,” he said. “A close second is that we will have the second-largest messaging company in the United States, with a better balance sheet that will allow us to move on with our advanced messaging plans.”
This will mark the 34th time Arch as acquired and integrated another carrier. Baker said the integration history of both Arch and MobileMedia will play an important role since it is MobileMedia’s last integration process that led to the company’s eventual bankruptcy.
“We have learned a lot about what to do and what not to do,” Baker said, pointing to MobileMedia’s ambitious fast-track conversion of three systems onto one billing system and one new customer service center.
“You don’t move precipitously and drastically,” Baker said. “In our integration on our end, we will move drastically different than what they tried to do three years ago.”
As such, he said the integration process will move in two phases and last about two years.
“Phase I will be focused on combining the two organizations, such as structure, and focusing on the $25 million of cost synergies that can be achieved without combining customer service or billing.”
In phase two, Baker said the two companies will converge onto a common billing platform, created by MobileMedia while under bankruptcy protection.
The combined company’s headquarters will remain in Arch’s Westborough, Mass., offices.
The new management team has yet to be made formal. Baker already announced the team reporting directly to him as CEO, which includes three MobileMedia executives-Steven Gross, executive vice president of sales and marketing; H. Stephen Burdette, senior vice president of operations; and Patricia Gray, vice president and general counsel. Shortly after the merger’s close, Baker said he expects to name the other management personnel, who will report to this already-established management structure.
Baker also said he will be combine the two companies’ sales forces. MobileMedia has targeted national and larger accounts while Arch has dominated in individual customer local presence. Baker said the combined local sales forces will operate in five regional divisions, each with their own integrated sales force. Arch’s corporate offices will operate the major/national account sales force, which will be operated by the core sales and marketing team. This national sales force will help train the divisional sales forces in advanced messaging sales when Arch rolls out its narrowband personal communications network, he said.
The acquisition of MobileMedia gave Arch two nationwide two-way NPCS licenses. Before the transaction, Arch owned only a minority stake in a license shared with Benbow PCS Ventures.
Before the merger was complete, MobileMedia began building out an NPCS network for those licenses, gaining a footprint in five geographic markets. Baker said Arch will halt any further construction of that network and opt instead to offer advanced messaging services using Arch’s resale agreement with PageMart Wireless Inc. in conjunction with the facilities-based infrastructure it has today.
“We will suspend construction until we build up a customer base and revenue stream from the ReFLEX 25 alliance,” Baker said. “It allows us to do a better job of matching expenses with revenues. I think it’s the prudent way to pursue advanced messaging.”
Baker said Arch must meet certain customer base and revenue goals before continuing with its own network buildout.
