Financial News, September 1999, p. 7
ARC Associates, the London-based telecoms M&A boutique, advised Sonera on its $1bn (E961m) investment in VoiceStream Wireless, the US cellular phone group which last week announced plans to acquire Aerial Communications for $3.27bn.
The deal, which represents ARC's largest corporate finance mandate to date, reinforces the specialist boutique's position as a force capable of working alongside the bulge bracket investment banks on large cross-border transactions.
The origins of ARC's advisory role date back to the end of 1998 when Sonera brought it on board to examine the options open to it regarding its $200m stake in Aerial.
"At the end of last year Sonera's investment in Aerial looked like a dud," said ARC director Will Iselin, referring to the fact that Sonera's original investment was then worth 30% of its original value.
Iselin was part of a three-person ARC team, including its chairman John Allen, which worked on the deal.
After working through various options with Sonera, ARC, together with Murray Swanson, the managing director of Sonera's US operation, proposed that the company should take a key stake in the consolidation of the US cellular phone industry. In addition to maintaining its stake in Aerial, which it has agreed to exchange for stock in VoiceStream Wireless, Sonera will invest $230m in VoiceStream via a debt-to-equity swap.
It also plans to invest a further $500m in VoiceStream once it completes the takeover of Omnipoint Communications, the other GSM cellular provider which VoiceStream bid for last month. Altogether, this will give Sonera a 7.9% stake in VoiceStream.
"The digital wireless phone opportunities in the US far outstrip those which are available in Europe because the price differentials are so great," said Iselin, referring to the fact that European wireless operators are valued at two to five times their US counterparts when valued on an enterprise value per POP. "So there is room for the US to play catch-up."
Reproduced from Financial News ®
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