Metricom gets cash infusion

Metricom last week got a huge boost in its effort to deploy its Ricochet 128 kb/s mobile data service, scoring $600 million in funding from MCI WorldCom and Vulcan Ventures.

Although the company expects the first wave of commercial availability to hit the streets by mid-2000, industry observers suspect Metricom will get things rolling soon with the financial backing.

"The funds we now have will enable us to deploy in nearly 50 U.S. cities," said John Wernke, senior vice president of marketing and sales for Metricom. "Although we have $600 million in equity, we will be looking for additional funding at a future point."

"[With this investment] I suspect there will be rapid deployment in the next 12 months," said Andrew Cole, senior manager of Renaissance Worldwide. "If they build out in the top 50 [metropolitan statistical areas], it will be a good window ahead of 3G."

As part of the deal, MCI WorldCom and Vulcan also will become distributors of Ricochet. In addition, MCI WorldCom has signed a five-year, non-exclusive wholesale agreement valued at $350 million for the services.

"We looked at the investment and it made sense. There is a great need for Internet access, and people are using it for everything," said a spokesman for MCI WorldCom.

Metricom will enlist additional distribution channels for Ricochet and embark on a multimillion dollar branding and marketing campaign.

"We needed a strategic partner for funding but also for operational synergy," said Roger Nolan, vice president of strategic alliances at Metricom. "We were looking for someone with a big operational fit for us."

Under terms of this deal, MCI WorldCom and Vulcan will purchase 60 million new convertible preferred shares of Metricom stock at $10 per share. Vulcan will own 49%, MCI WorldCom will own 38% and current public shareholders will own the rest.