News

NextWeb Acquires Worldwide Wireless Networks

Privately held NextWeb, Inc. has signed a deal to acquire bankrupt, publicly-traded Worldwide Wireless Networks, Inc., as NextWeb extends to cover California today, and more in the future.

by Alex Goldman ISP-Planet Associate Editor [September 20, 2002]

Fremont, Calif.-based NextWeb, Inc., a privately held fixed wireless Internet Service Provider, announced that it has signed an agreement to purchase the assets of Orange, Calif.-based Worldwide Wireless Networks, Inc. (OTCBB: WWWN), a company that is in bankruptcy.

Several months ago, an ISP-Planet article noted that NextWeb's continued success was in part due to its conservative financial policies. We asked David Williams, NextWeb's vice president of marketing and business development, whether this acquisition represented a departure from conservative financial policies.

"Absolutely not," replied Williams. "We have had and continue to have strong organic growth, but in this market there are some very good opportunities. World Wide Wireless had a good business but it also had a lot of debt on the balance sheet."

Williams said that the acquisition is a plan that the company has been considering for some time.

"We first spoke with them about six months ago," he said. "We introduced ourselves then. Later on, about three months ago, when they started to have financial problems, we started to talk about financial options, but we knew that we could only participate if they cleaned up their balance sheet, and we knew that the only way they could do that would be through chapter 11."

The bankruptcy court will have to approve the agreement, but since revenues come from customers, not equipment, and because the used equipment market is depressed, NextWeb may need to offer little more than World Wide Networks' liquidation price to be accepted by creditors.

Both companies are based in California, but NextWeb is in northern California, while Worldwide Wireless is in the South. The two networks complement each other, and that, according to Williams, is according to plan.

"It is our plan to continue to expand conservatively into new markets, first through California," Williams said. "We do not plan to go after all of the NFL cities all at once. We cannot recoup the cost of a buildout like that and investors are not interested in that kind of venture in the current market. Before we embark on any venture, we check that we have the capital to fund it."

Williams explained that one source of confidence in the future is NextWeb's strategic partners, which include health care giants Kaiser Permanente and Tenet Healthcare. They have agreed to allow NextWeb to lease any roof space that they own. This, Williams feels, gives his company a significant advantage in its expansion plans.

"Any WISP has to lease rooftop space," he noted. "It can become an important cost of providing service. Also, it's time consuming and expensive to locate sites and then go through lengthy and uncertain negotiations with landlords. We operate under a blanket contract [with our strategic investors] and can roll out quicker and cheaper. For example, in the southern California market, we have 91 buildings in the greater LA metro area. We can deploy small cells with a range of about 2 or 4 miles, and provide overlapping coverage."

Williams was confident about the future. "We're fully funded," he said, "and we plan to be profitable in the middle of next year. We've got solid backing from traditional venture as well as strategic investors."

He also noted that the fixed wireless ISP business is fundamentally sound, "I know ISP-Planet has interviewed numerous ISPs that are doing well. The break-even point for a fixed wireless business is often a fraction of the same for a DSL business, where most of the money is going to the LEC."

Williams was pleased with the new acquisition and looks forward to working with new colleagues. "Of course it's very attractive for us to continue to grow but it's also good for customers who will face no loss of service and for employees because we will retain them all."

In conclusion, he said, "We value what they've built and will welcome to the NextWeb team as we continue to grow."

—End