NexTel Plans 2 Notches for Its Wireless Belt : Communications: Deals with Dial Page and Motorola would secure its nationwide presence in the burgeoning industry.
In deals that would cement its nationwide presence in the burgeoning wireless communications field, NexTel Communications Inc. said Friday that it will merge with Dial Page Inc. and buy all of Motorola Inc.’s specialized mobile radio licenses, two stock-swap transactions valued at a total of $2.4 billion.
The deals are the latest in a string of aggressive moves by NexTel, a provider of specialty mobile radio services. With the backing of equity investor MCI Communications, NexTel is now positioned to become a major force in a new generation of mobile communications technology that officials say will dramatically change the way Americans communicate.
“I don’t think there’s anywhere near a good appreciation of the potential of wireless” communications, said Morgan E. O’Brien, NexTel’s chairman. “The people who are making the huge bets (on wireless technology), and the bets we are making, . . . are not crazy. What people don’t realize is how these products will change the way you live.”
By gobbling up Greenville, S.C.-based Dial Page--which provides mobile radio services in much of the Southeast--and the Motorola radio licenses, NexTel is eliminating potential competitors and filling big gaps in its wireless coverage area.
NexTel’s specialized mobile radio service provides wireless communications over a portable hand-held device that uses a portion of the airwaves once employed mainly by taxi dispatchers. It works on different frequencies than cellular telephones and is among the leaders in using digital technology to provide clearer circuits and greater capacity.
Rutherford, N.J.-based NexTel, formerly called Fleet Call, began buying up mobile radio licenses last year. In February, MCI announced it would invest $1.3 billion in NexTel to enable the firm to expand nationwide. NexTel also announced recently the purchase of OneComm Corp. of Denver for more than $650 million and the acquisitions of 22% of Mexican wireless provider Corporacion Mobilcom for $165 million.
NexTel and its big ally are girding for battle with AT&T;, whose $12.6-billion acquisition of McCaw Communications, the nation’s largest cellular phone provider, was recently approved by the Justice Department. NexTel says that in 1996 it will become the first company to offer digital wireless services nationwide.
Wireless communications services are already one of the fastest-growing segments of the $300-billion telecommunications industry. Yet the increasingly mobile American work force and the proliferation of ever-more-powerful portable computers is fueling even more demand for always-in-touch communications.
“There’s just tremendous pent-up demand for wireless services,” said Mark Lowenstein, director of wireless mobile communications for the Yankee Group, a Boston-based consulting firm. “Ten years into cellular, we already have 17 million subscribers for a service that doesn’t work all that well and has tremendously high prices.”
Still, NexTel’s generous deal--together with the stunning $833 million investors bid for government licenses last month for the right to offer new wireless communications services--has some analysts worried that companies may be reaching too deep into their pockets to get into a business that remains unproven.
“Prices are becoming stratospheric,” said Richard Nespola, who heads the Leawood, Kan.-based telephone consulting firm Management Network Group Inc. “Things have absolutely gotten out of hand.”
Nevertheless, NexTel--which earlier this year began offering wireless communications in Los Angeles and a few other California cities--could pose a serious threat to the cellular telephone industry and get the jump on new wireless technologies such as personal communications services.
Under the terms of the two agreements, Dial Page shareholders would receive about 28 million shares of NexTel stock, worth about $750 million. Motorola, one of the nation’s leading makers of electronic communications equipment, would get 62 million NexTel shares--worth nearly $1.7 billion--for its radio licenses and related specialized mobile radio properties, giving it a 22% stake in the company.
Nextel Communications Inc. at a Glance * Headquarters: Rutherford, N.J. * Chief executive: Wayland R. Hicks * Employees: 1,000 * Major services: Provides wireless communications using a variety of specialized mobile radio frequencies. * 1994 revenue: $67.9 million * 1994 loss: $56.9 million * Friday stock price: $26.75, up $1.125 Recent acquisitions and mergers with other mobile radio companies: * Aug. 5, 1994: Acquired Atlanta-based Dial Page Inc. and Motorola’s specialized Mobile Radio operations. * July 14, 1994: Acquired OneComm Corp. of Denver * November, 1993: Acquired Las Vegas-based Questar Telecomm Inc. and Power Fone of Detroit * July, 1993: Merged with Dispatch Communications Inc. of Baltimore * March, 1993: Purchased 62% stake in American Mobile Systems Inc. of Florida
Source: DataTimes; company reports; Standard & Poor’s Corp. Researched by ADAM S. BAUMAN / Los Angeles Times
