Independent cellular operators say they are poised for strong growth in coming years, despite the rising aspirations of mammoth telecommunications operators bent on controlling large market share.
“Most people just assume [small companies] don’t have the size to compete moving to the future,” said Arnold Pohs, chairman and chief executive officer of CommNet Cellular Inc.
Denver-based CommNet is one of several wireless companies that could be a favorable acquisition for a telecom player seeking wireless holdings. Other firms with value include Century Telephone Enterprises Inc. and Vanguard Cellular Systems Inc.
“We consider it flattering that we are thought to be a takeover candidate. But it’s not our intention to have the company up for sale. Every day we’re more valuable to our shareholders and employees,” Pohs said.
CommNet’s market capitalization has increased from $12 million in 1986 to the current $450 million. CommNet offers cellular service to 200,000 rural subscribers in a cluster of Western states-Idaho, Montana, Wyoming, North Dakota, South Dakota, Iowa, Utah, Colorado and New Mexico.
AirTouch Communications Inc., which has vast Western holdings, could be interested in CommNet, although Pohs said there has been no such offer.
CommNet intends to remain primarily a pure play in cellular, although it is expected to bundle paging and long-distance service into its package at some point. The company says it has a known brand name and sees enormous opportunity around the corner for roaming revenues and resale, possibly with the “WorldComs of the world,” Pohs said. WorldCom Inc. is a long-distance operator getting into wireless; buying airtime from the CommNets of the world would be a fast way of doing that.
“The soothsayers said there was no viability in rural communications as well, and we’ve proven them wrong,” Pohs said. “Today’s ever-shifting sands of telecommunications obscure new values that exist just below the surface, but our history suggests that we will gainfully avail ourselves of this outstanding opportunity.”
In the third quarter, CommNet’s total revenues increased 31 percent, to $36.2 million from $27.7 million in third quarter 1995.
Century Telephone recently updated its shareholder rights plan to replace the plan due to expire in November. The Louisiana-based firm said, “Century Telephone has no knowledge that anyone is considering a hostile takeover of the company.”
Total revenues for the year ended May 31 were $495.3 million, an increase of 18.9 percent when compared with revenues in 1995. Century is both a local telephone company and a cellular service provider. It has 325,000 cellular subscribers and 494,680 local exchange customers; Century is the 16th largest U.S. local exchange company and the 15th largest cellular company.
“We’ve been competing in wireless for years with AirTouch,” said Jeffrey Glover, Century’s director of investor relations. “There’s an assumption that bigger is better, and that a large company can run an operation more efficiently. But it’s easier to grow a company our size.”
Century also is building fiber optic local phone systems in the Texas cities of Dallas, Fort Worth, Arlington, Austin and San Antonio. Century plans to resell long distance and bundle it into its offering package. The company is participating in the D,- E, and F-block auction.
The company intends to remain independent, but said it would evaluate offers. Employees control 37 percent of Century Telephone Enterprise stock.
Vanguard Cellular is the country’s 14th largest cellular operator, with about 400,000 subscribers. A recent report by Prudential Securities rates Vanguard as high risk, due in part to a slowing of subscriber growth.
In addition to its core business, Vanguard owns 9 percent of Geotek Communications Inc., a specialized mobile radio operator launching new systems in metropolitan markets throughout the eastern United States. It holds 25 percent of International Wireless Communications, a firm building cellular networks in developing countries. Vanguard bought 26 percent of InterAct Systems Inc., a company that builds multimedia sales terminals for retail stores.
