New Comm to auction assets next month

4 Jan 2007

Puerto Rico’s smallest cellco New Comm Wireless Services has received court approval to auction its assets on 28 February, with a consortium of investment firms expected to open the bidding with an offer of USD103.2 million. On 27 December the US Bankruptcy Court in San Juan approved a joint venture, PRWireless Inc, formed by DBZ Ltd, M/C Venture Partners and Columbia Capital LLC, to serve as the lead bidder at the auction, and scheduled a hearing to review the results on 7 March 2007. New Comm, which sought Chapter 11 bankruptcy protection in late November 2006, has senior secured debt of around USD63 million and owes a further USD90 million in unsecured debt to ABN AMRO bank. The operator previously tried to sell its assets outside of Chapter 11 protection, but a deal it reached with a potential buyer earlier in 2006 was called off after a creditor filed an involuntary bankruptcy petition against the company. The petition was ultimately withdrawn.

New Comm offers CDMA2000 1x mobile services under the Movistar brand of shareholder Telefónica Móviles, which previously tried and failed to secure majority ownership of the company. In September 2004 the Spanish giant’s management contract was cancelled. Since launching in 1999, the cellco has never managed to reach the 200,000 subscriber mark, and its customers have recently been deserting it for one of its five US-backed rivals, Verizon Wireless, Sprint Nextel, Centennial, SunCom and Cingular Wireless, leaving it with around 90,000 users at the end of 2006. Telefónica owns 49.9% of New Comm Wireless, with Puerto Rican holding company Clearcomm owning the remainder.

Puerto Rico, Open Mobile (part of PRWirelessPR)