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The antennas have turned in the fixed wireless world.
Experts are now giving Teligent — earlier pegged as the least likely of the bankrupt broadband fixed wireless players to succeed — the best chance of returning to the market. Winstar Communications, once considered the golden child of broadband wireless, is now given slim odds of ever serving customers again, because it has botched the bankruptcy process.
Last week a new company, which sources close to the deal believe is headed by former Teligent Chairman and CEO Alex Mandl, offered $115 million for 11 of Teligents markets.
Although it used fixed wireless technologies similar to other operators to build out a high-speed data, local and long-distance network in 43 markets, Teligent failed to attract the numbers of high-paying customers that competitor Winstar garnered. As a result, when both companies filed for bankruptcy protection, onlookers believed Winstar had the best chance of successfully reorganizing.
But Winstar may have bungled its bankruptcy proceedings. Management has fought with creditors and struggled to secure financing during bankruptcy, said a source close to Winstar, who asked not to be identified.
In contrast, Teligent worked amiably with creditors, observers said. “A company that goes into bankruptcy and has reached some level of cooperation with creditors, and hopefully its new lenders, has a much better chance of getting out,” said Eric Cowan, head of the technology and telecom practice of law firm Akin, Gump, Strauss, Hauer & Feld.
Winstar has so frustrated its creditors that theyve given management a drop-dead date by which it must find a buyer. If Winstar cant meet that rapidly approaching date, the creditors say they wont give Winstar any more funds and will sell off the company in pieces, the source said.
The Blackstone Group, which advises companies on restructurings, has been shopping both Winstar and Teligent around and has attempted to package the two together for a single buyer, the source said. A group headed by Mandl, who was ousted by executives from IDT — which itself made a failed bid for Teligent — would be an unlikely buyer of both companies because he would need to raise significant amounts of cash. Investors arent apt to pony up that amount of money to an executive who has already failed once.
The bid for the 11 markets is subject to better offers, and Teligent has filed with the bankruptcy court, seeking permission to conduct an auction of the rest of its assets.
The question remains, however, whether any buyer of Teligent can build a successful business. “If a service provider wants to be pure broadband fixed wireless, I would have some questions over the next couple years, like, How much money do you have? ” said Michelle Gao, an analyst & Frost & Sullivan. However, a company such as WorldCom or Sprint could successfully employ broadband wireless, she said.