Benbow PCS Ventures Inc., of which Arch Communications Group Inc. owns 49.9 percent, plans to acquire Page Call Inc., allowing Benbow to compete nationwide in narrowband personal communications services.
Eureka, Calif.-based Benbow, owner of two regional NPCS licenses, signed a definitive agreement to purchase the stock of Page Call for $17 million. Page Call, of Coudersport, Pa., owns three 50 kHz/12.5 kHz licenses in the Northeast, South and Midwest regions. The licenses were won in the 1994 NPCS auctions under the name Lisa-Gaye Shearing. Together, the five licenses complete a nationwide footprint for services in the 930 MHz band.
The purchase price includes $3.25 million in cash and the balance in Series A convertible preferred stock of Arch. Benbow will assume $25.4 million in debt payments Page Call owes to the Federal Communications Commission. The payment schedule for Benbow and Page Call is the same. Each paid 20 percent down and are scheduled to make 40 total payments, the first two years on interest only and interest and principle for the remaining term through 2005.
“We’re thrilled to be able to acquire these other three licenses,” commented Ed Baker, Arch’s chairman and chief executive officer. Arch’s stock closed at $7.94, up 25 cents last Tuesday, the day Arch and Benbow announced the Page Call acquisition.
“The capital markets clearly see the strategic importance of the acquisition,” asserted Baker. “In today’s paging business, if you don’t have a national footprint, you’re really not a player.”
Baker said Arch will play two critical roles in the Benbow partnership, as manager of the network and distributor. “Arch has a management contract with Benbow to design, construct and maintain that nationwide narrowband NPCS network. As the third-largest paging company, Arch has demonstrated strong and robust distribution channels. Benbow will rely heavily on Arch to be a substantial distribution partner.”
“They (Arch) truly have the depth for the marketing and the engineering,” noted June Walsh, chairman and chief executive officer of Benbow. “They certainly have a good deal of the United States covered with their own system.” The partnership “is very positive for Arch and for Benbow. Arch is very strong in the Northeast and this will allow Benbow to play off that,” she added.
Benbow expects to begin offering advanced paging or messaging services sometime late in 1998 or early 1999, said Baker. “Arch and Benbow share the same philosophy of being a technology follower. Both June and I believe the fast follower strategy is the right one when it comes to new technology deployment, learning about InFLEXion and ReFLEX 25.”
Benbow is amid testing InFLEXion service in San Diego, using Glenayre Technologies Inc.’s network equipment and subscriber units by Motorola Inc. Walsh said Benbow expects to begin ReFLEX 25 trials soon. “We are very excited to be testing ReFLEX 25,” which “is a greater platform for our 50 kHz/12 kHz licenses.”
Benbow’s future products and services will be marketed under the Arch Paging brand. Any reseller product may be privately labelled.
Page Call Inc. is a joint venture owned by Lisa Gaye-Shearing, 50.1 percent, and Adelphia Communications Inc., 49.9 percent. Cable-TV is Adelphia’s primary business. As a women-owned business, Page Call-like Benbow-met the Federal Communications Commission’s criteria for a designated entity in the narrowband auctions.
Shearing and Adelphia also are active in broadband PCS, operating under the name Devon Mobile Communications L.P.
The Page Call transaction is subject to certain regulatory approvals and is expected to be completed later this year.
