Hughes Electronics said Tues. its 4th-quarter revenue increased 21.3% to $2 billion from $1.69 billion a year ago. It also said its operating loss dropped to $121.2 million from $371.8 million year earlier. For year, Hughes had total revenue of $7.2 billion, up from $5.5 billion in year. Loss from continuing operations narrowed to $60.3 million from $283.7 million. Earnings before interest, taxes, depreciation and amortization (EBITDA) was $153.8 million, beating analysts’ projections. Company also said it had added 527,000 net subscribers in 4th quarter, with backlog of 110,000 who have purchased systems and are waiting for installations. “This report increases the stakes and makes the company more attractive to buyers,” analyst said: “There were concerns that they were starting to lose momentum to cable, but this reaffirms that they are still growing.” GM is in talks with Rupert Murdoch over possible sale of Hughes Electronics for price industry reports say is $40 billion (CD Dec 27 p2).
SANTA CLARA, Cal. -- Current market conditions will force telecom businesses to return to “traditional business models” when seeking funding from venture capital firms, said a panel of financial analysts and venture capital partners at Executive Forum workshop Mon. at Telecom Industry Assn. (TIA) Supernet conference here. Valuations of telecom companies are coming “back to earth,” so having a fully funded business plan and cash flow is critical to obtaining venture capital funding, said Bart Schachter, founding gen. partner of Blueprint Ventures. Onset Ventures partner Susan Mason said telecom enterprises need to return to fundamental business models where “cash is king.”
AT&T said it would buy out Comcast and Cox minority stakes in Excite@Home, trading $2.9 billion of its own stock for its cable partners’ highly priced shares in Excite@Home. AT&T, which agreed last March to buy 60 million Excite@Home shares held by Cox and Comcast to consolidate its control of Excite@Home, reportedly sought to avoid large stock payout by offering some of its cable systems to 2 MSOs. But Comcast and Cox showed little interest in those properties, preferring to get AT&T stock at its currently deflated price. With transaction, AT&T said it would boost its economic interest in Excite@Home to 38% from current 23% and its voting interest to 79% from 74%. In return, Comcast and Cox will receive new, attractively priced stock warrants in Excite@Home and will continue to offer its high-speed data service through June 2006, including exclusively until June 2002. But 2 MSOs will retain right to end exclusive deals as well as entire distribution arrangement starting in Dec., as long as they're willing to forfeit warrants.
LCC International said it revised contract with XM Satellite Radio to include engineering support, initial operating and maintenance services and construction of smaller number of repeater sites due to shift to more tower-site-based network. LCC also will provide network monitoring and project management. Financial terms weren’t disclosed, but LCC said change would have $5 million negative impact 4th-quarter earnings.
AOL Time Warner, having completed its merger late Thurs. night following FCC’s approval, announced its new 16-member board. Company said new board -- 8 members each from AOL’s and Time Warner’s old 11- member boards -- would meet for first time later this week. New board consists of: (1) XO Communications Chmn.-CEO Daniel Akerson. (2) Barksdale Group partner James Barksdale. (3) Hilton Hotels Pres.-CEO Stephen Bollenbach. (4) AOL Time Warner Chmn. Steve Case. (5) Kleiner, Perkins, Caufield & Byers partner Frank Caufield. (6) CGLS Fund partner Miles Gilburne. (7) Hills & Co. Chmn.-CEO Carla Hills. (8) AOL Time Warner CEO Gerald Levin. (9) Colgate-Palmolive Chmn.-CEO Reuben Mark. (10) Former Philip Morris Chmn.-CEO Michael Miles. (11) AOL Time Warner Vice Chmn. Kenneth Novack. (12) AOL Time Warner Co-COO Richard Parsons. (13) AOL Time Warner Co-COO Robert Pittman. (14) Fannie Mae Chmn.-CEO Franklin Raines. (15) AOL Time Warner Vice Chmn. Ted Turner. (16) Vincent Enterprises Chmn. Francis Vincent. In one interesting footnote to FCC’s approval of takeover, consumer groups that had fought for strong regulatory conditions on deal ended up urging Commission to okay it even though they and other critics didn’t gain interoperability of AOL’s current instant messaging (IM) services. New ex parte filing from last week reveals that Media Access Project’s Andrew Schwartzman and Consumers Union’s Gene Kimmelman pressed Comr. Tristani, last holdout in IM fight, to vote for approval because agency had won as much as it could. Despite their strong support for “full interoperability of instant messaging services,” Schwartzman and Kimmelman said, “the net value of the relief the Commission could provide to consumers and the public from a properly crafted decision justified acceptance of an order which did not provide full interoperability.” Sources said consumer advocates also probably feared what might happen if merger review lingered beyond Democratic Chmn. Kennard’s tenure, which will end Fri.
Qwest said its customer service improved in 2000 with 98% of its installation commitments met when promised, representing best results in last 5 years, and 95% of its repair commitments met on time, best since 1996. In addition, more than 80% of service outages were repaired in less than 24 hours, up from 63% year ago, company said. It also announced line-sharing agreements with 4 competitors -- Contact Communications, Multiband Communications, New Edge Networks, NorthPoint Communications. Qwest said agreements would broaden availability of high-speed Internet and broadband services in its territory.
Financial News: J.P. Morgan Chase upgraded AT&T Corp. to long-term buy… Lehman Bros. predicted Time Warner Telecom, Winstar and XOXO would exceed its expectations in 4th quarter.
GSM Assn. reached agreement with TDMA wireless group Universal Wireless Communications Consortium (UWCC) to include TDMA interoperability with GSM as component of GSM Global Roaming Forum. Point of forum is to foster interoperability of GSM and non-GSM technologies with goal of intrastandard roaming among carriers. Groups said GSM and TDMA interoperability, through GSM/ANSI-136 Interoperability, has been under discussion since 1999. Agreement between 2 wireless groups brought development work under purview of roaming forum. Forum develops technical requirements for terminals, networking and commercial standards for services, billing and financial settlements.
Sirius Radio said it conducted first test of satellite radio system from orbiting satellite to mobile car radios. Ford Telematics Dir. Russ Minick said “difference between Sirius and regular radio is really impressive.” Tweeter Home Entertainment Group Buyer Marc Spatz said listening to service live “exciting.” Testing includes end-to-end testing and integration of Sirius receiver, studio, broadcast, transaction management and customer service systems, as well as feedback from listeners on programming, company said.
FCC declined Fri. to preempt Mo. law (HB 620) that prohibits political subdivisions such as municipalities from providing telecom services or facilities, concluding that term “entity” in Sec. 253(a) of Communications Act wasn’t intended to include political subdivisions of state but rather appeared to prohibit restrictions on market entry that apply to independent entities subject to state regulation. Acting on preemption petition filed by Mo. Assn. of Municipal Utilities, City Utilities of Springfield and others, Commission said that if municipally owned utility sought to provide telecom service or facility as independent corporate entity that was separate from state, “we could reach a different result under Section 252(a).” Mo. municipalities argued that even if Commission were correct in concluding that Congress didn’t clearly intend to include municipalities that didn’t own and operate electric utilities within scope of Sec. 253, Congress did clearly intend term “any entity” to apply to power companies owned by municipalities. As it found in Texas Preemption Order, FCC said, “any entity” was not intended to include political subdivisions of state. Commission urged states to refrain from enacting absolute prohibitions on ability of municipal entities to provide telecom service. Municipally owned utilities have potential to become major competitors in telecom industry, it said, and their entry could further goal of Act to bring benefits of competition to all Americans, particularly those living in small or rural communities. As for concerns of taxpayer protection from economic risks of entry and possible regulatory bias that municipalities’ entry raise, Commission said such issues could be dealt with successfully through measures that were much less restrictive than outright ban on entry. For instance, there could be nondiscrimination requirements that require municipal entity to operate in manner that’s separate from municipality, “thereby permitting consumers to reap the benefits of increased competition.” FCC also rejected municipalities’ contention that even if municipally owned utilities were political subdivisions of state, legislative history of Sec. 253 (a) demonstrated that Congress clearly intended “any entity” to cover municipal electric utilities. “Other than indicating that municipal energy utilities may make their facilities available to carriers, the legislative history that the petitioners cite does not distinguish between publicly owned and privately owned utilities,” Commission said. In joint statement, FCC Chmn. Kennard and Comr. Tristani said they voted reluctantly to preempt petition because they believed “HB- 620 effectively eliminates municipally owned utilities as a promising class of local communications competitors in Missouri.” Commission was constrained in authority to preempt by decision by U.S. Appeals Court, D.C., City of Abilene, and U.S. Supreme Court’s decision in Gregory v. Ashcroft, they said. Referring to letters from many members of Congress that said it was intent of Congress when it enacted Sec. 253 to enable any entity, regardless of form of ownership or control, to enter telecom market, they urged Congress to consider amending language in section to clearly address municipally owned entities. In separate statement, Comr. Ness urges states to adopt less restrictive measures, such as separation or nondiscriminatory requirements, to protect utility ratepayers or address any perceived unfair competitive advantage.