Seeking to take advantage of their similar technology and markets, U.S. Wireless Corp. and Cellular Technical Services Company Inc. last week signed a letter of intent calling for the companies to join in a stock transaction.
The letter of intent provides U.S. Wireless the option either to acquire or merge with CTS. Upon completion of the transaction, both companies will own 50 percent of the combined entity, with U.S. Wireless controlling the board of directors.
The companies began a 45-day due diligence period and negotiations of a final agreement, said Dr. Oliver Hilsenrath, president and chief executive officer of U.S. Wireless. Approximately .52 shares of U.S. Wireless stock will be traded for every 1 share of CTS stock, said the companies.
U.S. Wireless is one of several companies offering a solution to the Federal Communications Commission’s Phase II E911 mandate. The company’s RadioCamera product determines the location of wipeless calleps using a fingerprint of multipath rays.
CTS’ Blackbird platfmrm is a fraud prevention system that has already been deployed in about 2,000 cell sites in more than 40 markets throughout the United States, said Stephen Katz, chairman and CEO of CTS. The company is “capable of providing virtually all of the back office and support systems for RadioCamera,” he said.
“Time-to-market is the answer to what we’re doing, and what we’re trying to accomplish is to enable tomorrow to happen today,” said Hilsenrath. “The mix of the companies offers a huge advantage in time to market for value-added services and location-related services.
“RadioCamera springboarded and launched on top of Blackbird is going to find its way into carriers’ base stations substantially faster, with less effort and without having to go through a lot of the processes that CTS has already put in place, therefore creating for the joint company a much vaster opportunity and a much faster-to-market [product] than any of the competitors CTS and U.S. Wireless have separately,” continued Hilsenrath.
CTS’ core competency is its backbone and network assets, as well as the RF fingerprinting technology, said Katz. ” That also includes monitoring, network operating centers, real-time services and support. Those assets are applicable not just to RF fingerprinting but also to geolocation services.”
Both companies’ products go into the base station and connect to the antenna and to the back office, said Hilsenrath. “The two products are geared toward slightly different markets, but they are identical in shape and form and the way they integrate into the base station.”
The RadioCamera system, said Hilsenrath, is ideally suited for urban markets where multipath causes problems for other location systems. U.S. Wireless’ targeted urban markets dovetail with CTS’ deployment of its Blackbird system in urban areas where fraud is more widespread.
The letter of intent also calls for the companies to seek about $15 million in new financing, which will be used to promote the companies’ combined product offering.
Immediate plans for RadioCamera call for expanded test deployment as well as additional deployments with yet-unnamed carriers during the second quarter. Hilsenrath said the RadioCamera system could be generating revenues as soon as next year.
The companies said they plan to pursue agreements for RadioCamera in markets where Blackbird already is deployed in addition to new markets. CTS said it has agreements for Blackbird with AirTouch Communications Inc., GTE Wireless, Ameritech Cellular Services, SNET Mobility Inc. and Bell Atlantic Mobile.
CTS recently acquired two small vendors as part of an effort to consolidate operations and also is undergoing a company-wide restructuring that to date has reduced overall head count and space requirements by approximately 20 percent, said Katz.
