AS LATEST PLAN FALLS THROUGH, TELIGENT SHORT OF OPTIONS

Now that a shell company has failed to raise the resources it needs to buy Teligent, the bankrupt fixed wireless CLEC is trimming costs to make itself more attractive to potential buyers. But the odds are against Teligent in its effort to avoid liquidation by finding a single company to purchase its core assets.

In a time dominated by skittish investors, the collapse of Teligent Acquisition Corp. was not surprising. The purchase deal consisted of a mix of stock, warrants and a hefty $72.5 million in cash. Possible backers were hesitant to support the purchase because of the lack of liquidity involved, said a source within Teligent.

TAC's shortfall immediately sent shockwaves through Teligent. The company cut 300 of its 500 employees and announced plans to discontinue service to 7000 of its 11,000 customers. Teligent no longer will provide local service or Internet access to its remaining 4000 customers. But the carrier will continue its facilities-based private line, transport and wholesale services, as well as resold services in all 74 markets where it holds fixed wireless licenses.

Teligent cut its staff and customer base to conserve its remaining cash resources and trim down for acquisition by another buyer, said the company source. Other parties are interested, but many require that Teligent burn less cash, the source said.

“The key infrastructure is still in place,” the source said. “It's dependent upon people outside looking into this to see if they can grow a business from what's here.”

Teligent's most senior executive, Chief Operating Officer Jim Continenza, has no plans to liquidate the company and sell its assets on a piecemeal basis, according to the source. Chief among Teligent's remaining holdings is its 11-city, fixed wireless and wireline network, including assets such as 21 switches and the company's 24 GHz spectrum.

And there now appears to be competition to find a buyer, as fellow fixed wireless vendor Winstar Communications last week asked a bankruptcy court to approve an auction for its assets as soon as next month. Given the struggles in the fixed wireless industry, some analysts question whether anyone will make an offer for either company's network.

“Every company [involved in the sector] is either exiting fixed wireless or going bankrupt,” said Chris Mohr, an analyst for New Paradigm Resources Group. “When capital is so tight, nobody's willing to invest money in an unproven technology.”

In addition, any parties interested in buying Teligent would have likely appeared when TAC's bid was being considered by the courts, said Michael Speyer, director of small and medium-sized business communications for The Yankee Group.

Still, Teligent's spectrum and network are attractive assets, according to Peter Jarich, director of broadband research for The Strategis Group. The most likely buyer, either in whole or in part, would be an interexchange carrier or an ILEC — now the only companies that have the resources and the inclination to purchase cheap local assets, he said.

FOR AN INSIDE LOOK AT TELIGENT'S RISE AND FALL, READ OUR OCT. 8 FEATURE, MURDER BY NUMBERS.