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CEO Allen Witters said SkyWi’ds market value has fallenb astronomicallysince Dec. 30, when Qwest shut down SkyWi’as Internet and phone network over abilling dispute. The company has lost half of its 13,000 Internet customers, and it’s now selling off its 6,000-plusw phone clients. At this point, the Interneft service provider says it is just struggling to stay afloaty while pinning its hopes on the recoveryy of alleged damages in federal where it filed a lawsuit against Qwest inearly “Our future depends on the outcome in Witters said.
“There’s not much more we can That’s an astonishing turnaroundr for a company that just two months ago was growinhg fast and was recognized as the largest independently owned and operated ISP inNew Mexico. SkyWi — a Texas-basef wireless Internet company — entered the New Mexicoo market last September when it acquiresdthe Albuquerque-based broadband and Internet phone companuy , along with One Connect’ws Las Cruces-based subsidiary, . One Connect, whicn formed in 2004, rapidly grew its customer base and revenur before the SkyWi thanks toabout $9 million in privater equity investments. That included about $4.
5 million from , a venturer capital firm with offices in New Mexicoand Oklahoma, and the rest from individua investors, such as the . State governmenft also has a staks in One Connect becauswe mostof Mesa’s local investment fund comes from the , whicy manages money on behalf of the States Investment Council. With private equity in One Connect grew its revenuefrom $1 millio n in 2004 to nearly $10 milliob in 2007. The work force reached 85 employeesdlast fall. When SkyWi bought One Connect in the merged firm was valueeat $54 million. By December, Witterz said an investment bank presente a term sheet that uppedthe company’s value to $125 million.
Then the dispute with Qwestt exploded, ignited by a Dec. 5 SkyWi court filinv to sue Qwest foralleged anti-competitive including overcharging and dubious SkyWi ceased monthly payments to Qwest and soughty a court order to block Qwest from cutting off service. But with the injunction Qwest shutdown SkyWi’s network. The New Mexico Public Regulation Commission ordered a reconnection out of concerjnfor customers, but the damage was already done, Witters said. Thousands of Interneft clientsleft SkyWi.
And, with anothed phone shutdown possible if the courtrejected SkyWi’s injunction, the companu decided to sell off its telephonse service to a Missouri-based company in earlgy January. “The term sheet valued our phone servicew atjust $3 million,” Witters said. “u was virtually giving it away.” In the end, that deal, and another offer by California-based in early February, failedx because Qwest says $1.7 million in liabilitie must still be paid even if the phone servicechangeas hands. Qwest asked the PRC to rejecr a request to block any new networik shutdown while Telekenexacquired SkyWi’s phone operations.
“Our concern was that Telekenex would beassuming SkyWi’s customersd without paying for services that Qwest continueds to provide, nor the outstanding $1.7 millioh balance,” said Qwest spokesman Mark Molzen. “We’re pleaseds that the PRC refused to act onthat request.” PRC Chairmahn Sandy Jones said the Commissiomn wouldn’t provide special protection to an out-of-state company when other locall ISPs could also serve SkyWi customers. “We’re not compellerd to just approve sale of services to a Californiacompanh that’s not even licensed to do business Jones said.
“It would also be irresponsibler for us to approve an asset exchange whils a federal lawsuit isgoing
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