MIDDLETOWN – WiMax service provider Towerstream Corp. said Tuesday it will pay $1.6 million to buy an Arizona company’s consumer contracts and network infrastructure in Chicago and Nashville, Tenn.
Towerstream said the all-cash deal with Sparkplug Inc. will expand its Chicago subscriber base by about 150 percent, increase the market’s annual revenue by about $1.3 million and expand its network coverage area by 45 percent.
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Towerstream has offered service in Chicago since 2008, and reported $676,560 in revenue there during the first nine months of 2009, making it the company’s fifth-largest market by sales.
Nashville will be Towerstream’s 11th market. President and CEO Jeff Thompson said the region’s profile was similar to that of Providence-Newport, which was the company’s first market in 2000 and which he said generates a gross margin of roughly 73 percent.
“We believe we can achieve similar results in Nashville over the long term and look forward to entering this market,” he said.
Towerstream said the deal, the first acquisition in its history, is expected to close by the end of June.
“We have been working diligently to identify acquisition opportunities which not only increase our scale but integrate with our focus on high-margin monthly recurring business,” Thompson said. Sparkplug “was an ideal match for us with its strong base of satisfied customers and attractive infrastructure.”
The deal will leave Scottsdale, Ariz.-based Sparkplug operating in three markets: Des Moines, Iowa; Phoenix, Arizona; and Las Vegas, according to its Web site. The company was formed in 2006 by the merger of Chicago’s Sparkplug with Telespectra of Scottsdale and Prairie iNet of Des Moines, according to Crain’s Chicago Business.
Additional information is available at towerstream.com.
