INTERVIEW-Covad in wireless deal talks, eyes NYSE listing
7:50p ET May 31, 2006 (Reuters) NEW YORK, May 31 (Reuters) - Covad Communications Group Inc. is in talks with Sprint Nextel Corp , XO Holdings Inc and others to use their wireless airwaves to bridge gaps in its networks and cut costs by as much as 20 percent, the company's chief executive said on Wednesday.
The telecommunications company, which is listed on the American Stock Exchange, is also eyeing a move to the New York Stock Exchange, CEO Charles Hoffman said in an interview with Reuters.
Covad competes with local phone operators such as Verizon Communications and AT&T Inc but it also rents local phone lines from these companies to sell business customers high-speed Internet links and Web-based telephony.
As well as Sprint and XO, Covad is talking to Aloha Partners and investor Mario Gabelli about using their wireless licenses to build local network links and reduce its dependency on rented lines from its rivals, he said.
"We are in talks with all those to use their spectrum," said Hoffman, who added that the company plans next week to announce a wireless trial with XO, which is majority-owned by billionaire financier Carl Icahn.
Hoffman said local phone rentals account for 20 percent of Covad's operating expenses and he hopes to reduce these costs by using wireless links instead.
Covad aims to have wireless deals in place as soon as possible but expects much of its wireless network building to take place in 2007, he said.
"We'll patch this together in various markets with different partners," said Hoffman, adding that Covad does not want to buy spectrum if it can use that of its partners.
"The trouble for someone like us is we're just at profitability and we don't want to spend a lot of money we don't have to," he said, noting that Covad had spent about $2 billion building its national network in the last 10 years.
Covad said on Tuesday that it expects to post a 2006 net loss of $39.5 million to $29.5 million on net revenue of between $475 million and $485 million.
Hoffman said the company would like to move to the New York Stock Exchange in order to attract more institutional investors to help make its share price less volatile.
"About 80 percent of our shares are owned by retail investors," he said.