Accelerating consolidation in the wireless industry engulfs yet another prominent company as MobileMedia Corp. agrees to acquire BellSouth Corp.’s MobileComm paging subsidiary and its two-way nationwide narrowband personal communications services license for a total of $945 million, the largest acquisition ever in the paging industry.
Combined, the companies said they will have 4 million subscribers and more than $560 million in total revenues, trailing industry leader Paging Network Inc. which claims 5.4 million subscribers. The deal, subject to regulatory approvals, is expected to close early next year.
“This acquisition represents a breakthrough in the personal communications industry. The combined entity will have two nationwide one-way wireless networks, two nationwide narrowband two-way PCS licenses, a sales presence in 85 of the top 100 markets, an extensive retail distribution network that encompasses more than 15,000 stores and the most efficient back-office in the industry-a great combination,” said MobileMedia’s Chief Executive Officer Gregory Rorke.
MobileMedia recently completed its $188.5 million purchase of South Carolina-based Dial Page Inc. (RCR, Aug. 21, 1995, p.20)
“The biggest difference between the MobileComm acquisition and the Dial Page acquisition is size. With Dial Page, we acquired about 360,000 subscribers and with MobileComm we get 1.7 million,” said Santo Pittsman, MobileMedia vice president and chief financial officer.
“Dial Page is a regional provider while MobileComm is a nationwide facilities-based provider with a very strong retail presence. We didn’t really have a strong presence in the Southeast. MobileComm provides very complimentary coverage to our other markets,” he said.
BellSouth’s Chairman John Clendenin said, “Today’s rapidly changing telecommunications environment presents a wide range of exciting new opportunities for BellSouth*…*Given those changes and the rapid consolidation under way in the paging industry, we thought now was an opportune time to reassess our investment in MobileComm.”
BellSouth spokesperson Tim Klein said his company had three good reasons to sell. “The timing is right. The paging industry is undergoing a consolidation requiring a strong commitment of resources. We had to decide whether to make that commitment or sell the company,” he said.
And,”We got an attractive offer. They understood the value of MobileComm’s business,” Klein said.
Finally, “Our strategy is to provide full-service telecommunications leadership in the Southeast, to grow our domestic wireless business and to pursue international opportunities. We can still offer our customers paging services as a reseller; we just won’t own the system. And we get the cash to pursue other opportunities,” he said.
Not only will BellSouth continue as a reseller of MobileMedia paging services but the MobileComm name will be retained by MobileMedia, Pittsman said.
“MobileComm has spent a lot of marketing dollars in advertising their brand name. As paging products become more consumer oriented, a brand name is going to be more important and we want to leverage off that,” he said.
Besides size, coverage and retail distribution clout, Pittsman noted MobileComm’s national paging license was attractive.
“MobileMedia has a national paging license with a common frequency and exclusivity but it’s not built out. With MobileComm we not only get more spectrum but it’s also built out with subscribers on it,” he said.
MobileMedia is reportedly the largest reseller of nationwide paging service from Mobile Telecommunications Technologies Corp.’s SkyTel subsidiary, a relationship that’s bound to change in the near future.
“Since MobileMedia already had a national paging license, SkyTel probably anticipated the reseller relationship would change. But this is certainly going to accelerate it,” according to Roberta Wiggins, industry analyst at the Yankee Group.
At deadline, MobileMedia’s stock had jumped about five percent to $28 per share on the news.
