WinStar Communications Inc, which sells local and long-distance voice and data services to business customers using a so-called fixed wireless network said yesterday that it would gain $900m from Microsoft Corp and other investors toward expanding operations. The number-one software giant has teamed with investment companies, Credit Suisse First Boston; Welsh, Carson, Anderson and Stowe VIII and Cascade Investments, to take a 13% stake in WinStar, the New York-based communications provider said yesterday.
WinStar said it would use the funding to expand its network products and services. News of the investment sent WinStar shares, traded on the Nasdaq market, up 16.33% to close yesterday at $73. WinStar deploys rooftop antennae to transmit phone and data signals to companies’ wide area networks (WANs). The system uses radio waves rather than the usual last-mile phone connections involving copper phone lines or fiber optic cables.
Microsoft’s investment adds to the $7.9bn it has spent on phone and cable investments in the past two years, including $5bn sunk into AT&T Corp and $600m invested in Nextel Communications Inc. The company has a followed a path of investing in internet connectivity companies as it expands its range of internet software. The deal also marks the software giant’s second investment in a company using wireless technology to offer voice, data and internet services in as many months. Just last month Microsoft announced a tie-up with investment company, Hicks Muse Tate & Furst to invest $500m in voice, data and internet communications company, Teligent Inc.
WinStar and Microsoft plan to co-market internet based multimedia services to businesses. WinStar will tout Office 2000 and other application to customers via its network and internet data centers. The companies will also mount joint sales and marketing program, which will feature a national seminar program, sales referrals and trade show appearances.
