A Vancouver-based wireless Internet provider for organizations made two quick moves to grow its business last month after hiring an executive with experience in acquisitions.
First, MetroBridge Networks looked east across the country and signed a letter of intent to buy WiBand Communications Corp. of Winnipeg, which operates in that city as well as in Calgary and Edmonton.
When the $9 million cash and share deal closes it will double MetroBridge’s size in this country.
But more significantly for the company’s goals it also signed a letter of intent to buy Utah Broadband LLC, a wireless service provider with some 3,000 customers in the Salt Lake City area, for US$4 million in cash and US$1.4 million in shares.
It will be the second U.S. region MetroBridge operates in. Last December it bought a wireless provider in Phoenix.
The moves south are crucial to the company’s business plan, according to Dorian Banks, its co-founder and new president. “It’s easier to raise capital if you have some American assets,” he explained in an interview. “Then you can go to the Americans and it [the company] doesn’t seem so foreign to them. “
Also, we think there will be greater shareholder return because we’re most likely to be acquired or merged into a major U.S. company, as opposed to a Canadian company.” “We’ll keep doing these acquisitions until we get to $30-$50 million in sales, and see if a merger happens.”
It’s been a big year for MetroBridge. In July it went public on the Toronto venture exchange through a reverse takeover and raised $9 million, after which it hired Geoff Hamilton, former chief acquisitions officer for a dental laboratory chain, to be its vice-president of corporate development.
Then last month, in addition to announcing the planned acquisitions, it shook up its management. With the company having gone public, CEO Dave King, first hired as chief operating officer in 2005, has left and Banks, who’d been chief technology officer, moved to become president. He’ll be in charge of MetroBridge’s day-to-day operations.
Banks said the company will wait a year to see how things go before deciding if it needs to add a chief executive officer. Meanwhile Martin Carsky, executive vice-president of Anthem Capital Corp. and chair of MetroBridge’s audit committee, has become executive chair of the service provider’s board.
MetroBridge joins TeraGo Networks of Thornhill, Ont. and Craig Wireless in going public this year for money to fuel expansion to meet the need for broadband wireless. Banks got into wireless by accident in 1999 when he was an IT consultant to a business that needed Internet access. Wireless was the solution, and that lead to him forming a service provider. In 2004 it merged with Universco and was renamed MetroBridge.
Although it offers small business and enterprise packages, letting customers choose the speed they want up to 45Mbps. The average connection is 8Mpbs.
Based on a pre-WiMAX standard, the company uses unlicenced spectrum for connections up to 10Mpbs. Hardware partners include Cisco Systems, Israel’s Alvarion Ltd. and Markham, Ont.’s Redline Communications.
“Our sweet spot is the gulf between ADSL and Fibre,” he said. “There’s nothing for a company to go to if they’re toping out their downloads on ADSL, and either there’s no Fibre near them or it’s too expensive for their business.”
Roughly half of its business comes from small and medium-sized firms, with the rest from large-sized organizations. A small number of government departments and police forces are also customers.
What gives his company an edge over other wireless providers, he said, is that MetroBridge’s infrastructure is built for serving enterprises. Still, according to its first quarterly report the company lost $621,900 in the quarter ending June 30 on revenue of $926,900.
Banks hopes the company will be profitable by the fourth quarter of next year, or sooner if he makes another profitable acquisition.
Meanwhile, the company is also preparing to launch new products. One is dubbed CityBridge, which will allow MetroBridge wireless customers in major cities it operates in to buy VPN service over MetroBridge-leased high capacity lines. Currently, customers have to lease Fibre from a carrier if they want to link offices.
