Intel pumps $37m into Unwired
Unwired CEO David Spence said the proceeds would be used to expand the company's services beyond Sydney next year, although he would not be drawn on which cities would be first.
Spence said the funds were sufficient for Unwired's immediate infrastructure plans: "We'll start rolling out in other cities ... we'll look to other funding as we need it," he told reporters at a press briefing in Sydney Thursday morning.
WiMax, also known as 802.16, is a high-speed wireless metropolitan area network (Wireless MAN) technology that provides broadband connectivity to fixed, portable and nomadic users.
It comes in two flavours -- 802.16d, which is used for fixed point-to-point networks, and 802.16e, which will support mobility.
As part of the deal, Unwired will adopt future Intel-produced WiMAX products. The carrier currently uses technology from Navini, another beneficiary of capital from Intel.
While Varun Kapur, co-director of the chipmaker's Capital division, wouldn't reveal the size of its Navini investment, he was positive about Unwired's potential to set an example for other companies.
"It's a model that other leading service providers around the world could and should replicate," he said, noting Intel was in the habit of investing in companies producing products around wireless access.
Kapur said Intel decided to invest in Unwired due to its WiMAX spectrum ownership, its use of Navini technology and the maturity of the fledgling business. In addition, he noted it was Intel's first such investment in the Asia-Pacific region and pointed to tremendous growth levels in the Australian broadband market as a deciding factor.
"We felt that [Unwired] has demonstrated wireless capability, deployment of wireless networks, access to customers, and a strong regional presence .... We hope that this investment will result in an acceleration for the deployment of WiMAX networks in Australia," said Kapur.
Intel expects WiMAX-enabled base station equipment to be available by 2006 and the majority of laptops shipping in 2007 to contain WiMAX access hardware. Most notebooks shipping today come embedded with Wi-Fi chips, which allow short-distance broadband connectivity.
Unwired's Spence said it would treat the investment in each city as a separate business, and confirmed the carrier would need 70,000 customers to break even. Last month, it clocked around 28,000 subscribers.
Because of Unwired's existing resources, rolling out to additional cities would only require a "couple of additional project managers", he said.
Unwired shareholders will meet in October to approve the deal. "Details will be sent to shareholders shortly ... accompanied by an independent expert's report from KPMG Corporate Finance," Australian Stock Exchange-listed Unwired said in a statement.
Avoiding the BigPond
Spence was unfazed by Telstra BigPond's wireless broadband service, which officially launched this morning.
Spence acknowledged the giant telco had the advantage of coverage since it runs on Telstra's CDMA mobile phone network, but said it wasn't a pure wireless broadband offering.
"It's a product that's been developed on a mobile phone network and enhanced for data only services," he said, alleging that if an average Unwired customer switched to Telstra's service the cost would multiply by five or six times.
Despite Spence's confidence, Unwired waited until last week to significantly lift the download limit on its plans -- a move that could make the service more attractive.
Another point that may put Telstra ahead is the fact it offers both desktop and notebook solutions. Unwired's laptop card was initially supposed to be launched in June, but the company is still testing an improved version from Navini.