Towerstream growing through acquisition

Towerstream (NASDAQ:TWER) built its first 10 metro networks with sweat equity. For the 11^th, it decided to plop down cash.

The business broadband wireless access operator said today it is purchasing Sparkplug Communications’ networks and operations in Chicago and Nashville for $1.6 million in cash and stock, expanding its reach in the Windy City while expanding its footprint into a new metro area.

This acquisition was a classic build versus buy acquisition," said Towerstream CEO Jeff Thompson said in an e-mail interview. "With the current economy and multiples being offered, we can buy cheaper than build."

While Towerstream has been in Chicago since 2008, Sparkplug had built the bigger network and the larger customer base. After the acquisition closes, Towerstream’s broadband wireless coverage footprint will increase by 45% and it will its subscriber numbers will increase by 150%. Combined, the Nashville and Chicago networks will give Towerstream 10 new points of presence, off of which it hook its microwave and broadband wireless radios.

Integrating the two networks, however, might prove tricky as the two operators use different access technologies. Towerstream uses Alvarion (NASDAQ:ALVR) WiMax radios in the unlicensed band while Sparkplug uses Motorola’s (NYSE:MOT) proprietary broadband wireless technology Canopy. But since Towerstream solely offers fixed broadband connections to businesses it doesn’t haven’t to worry about compatibility between the two systems and could keep the networks separate.