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Mobile & Wireless
Soaring Content Drives $1.5B FiberTower-First Avenue Deal
Planned Merger to Better Address Wireless Operators’ Booming Backhaul Needs
by Bob Wallace
As clear evidence of the rising busines stakes for backhaul for wireless
operators FiberTower Corp., a national provider of wireless backhaul, and
First Avenue Networks Inc. today announced plans to merge in a deal
valued at approximately $1.5 billion.
The business of backhaul is bomming as operators deploy faster wireless
links, carry bandwidth-devouring content such as video, and begin
deploying WiMAX links to customer sites.
The combined company will be named FiberTower Corp. and will emerge
as one of the nation’s largest operators of wireless transport services.
Both companies today operate networks to provide backhaul - transport
from cell site to switch - for wireless carriers.
The duo claims the new company will have an installed base in 12
markets with more than 1000 sites. The two companies’ networks and
operations are complementary and once combined will have minimal
overlap.
“Since our founding five years ago, we have been focused on delivering
mission-critical backhaul to our customers,” said Scott Brady, CEO,
FiberTower. “This will enable us to go deeper in our existing markets and
broaden our reach to new markets.”
"On paper it makes sense. FiberTower is trying to target the
backhaul; space and so is First Avenue Networks," said Peter
Jarich, principal analyst-wireless infrastructure at Current
Analysis. "First Avenue Networks has the spectrum; FiberTower
has a track record of working with the operators to do wireless
backhaul."
The merger is probably an indication, too, that First Avenue,
which built its business by acquiring spectrum from early
century wireless flameouts such as the original First Avenue
Networks (FAN) and Teligent, was finding the backhaul space
a tough row to hoe. Things got even stickier last month when
XO Communications launched its own wireless play, Nextlink
and using spectrum in the 28 to 31 GHz range.
"This definitely makes them a much more competent
competitor to Nextlink," Jarich said. "It's a real endorsement
that FiberTower knew what they were doing."
Upon close of the merger, Michael Gallagher will become CEO of the new
entity. He brought over 22 years of telecommunications, networking, and
wireless industry experience to First Avenue Networks when he took the
helm as president and CEO in early September 2005. The newly merged
company’s board of directors is to consist of five members selected by
FiberTower and three members selected by First Avenue in addition to
CEO Michael Gallagher.
The transaction is expected to close by the end of
the third quarter of 2006.
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