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Thermo's management
believes telecommunications services are drivers of economic growth. Companies
in the sector are being confronted, either directly or indirectly, with
technological change, increased competition, an evolving regulatory environment
and shortened product cycles. Those factors coupled with fast moving product
cycles and on-going pressure to evolve causes volatility in the sector which
creates both risk and opportunity. Thermo believes that there are attractive
investment opportunities in companies with compelling prospects, competitive
advantages, and accomplished management teams.
Thermo has made eight
direct investments in the telecommunications industry through Thermo Telecom
Partners LLC.
- Xspedius Management Corp. LLC ("XMC" ). Thermo made a
substantial investment to create XMC. Through its investment, XMC acquired
substantially all of the assets of e.spire Communications, Inc. ("e.spire").
XMC acquired e.spire's competitive local switching and substantial fiber assets
in 36 markets spanning 19 states. XMC was an integrated communications provider
and offered traditional local and long distance voice services, dedicated
Internet access, and advanced data solutions, including ATM Ethernet. Thermo
committed additional capital and management to facilitate XMC's turnaround and
growth. TW Telecom acquired XMC in 2006.
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Xspedius Holdings Corp. ("XHC" ). Thermo also invested in XHC, a
competitive communications carrier based in Lake Charles, Louisiana. XHC
offered integrated voice, data and Internet services to small and medium-sized
businesses throughout the southeastern states, and offered dedicated Internet
service through SDSL and T-1's. Effective April 1, 2003, Thermo combined the
business of XMC and XHC into one company which operated under the name Xspedius
Communications ("Xspedius).
- MPower Communications ("MPower" ). In 2002, Thermo invested in
the Texas assets of MPower Communications. During 2003, these assets were
effectively separated from MPower, and independently operated since April 2003
by Xspedius Communications on behalf of Thermo under a management contract and
a lease and integrated into Xspedius.
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FiberLight, LLC, formerly Xspedius Fiber Group, ("FiberLight”www.fiberlight.com ).
ACSI Network Technologies, Inc. was acquired by Thermo on November 1, 2003 and
is now operating under the name FiberLight, LLC. FiberLight sells and leases to
third parties, including other communications companies, municipalities and
large enterprise clients, high capacity data transport services via metro fiber
and conduit owned by the company. By the end of 2010 the company will own and
manage approximately 520,000 metro fiber miles. The company's principal assets
are located in Alabama, California, District of Columbia, Florida, Georgia,
Maryland, Texas and Virginia.
- Globalstar Satellite Communications ("Globalstar"
www.globalstar.com).
Globalstar is the world's most widely used satellite phone service offering
voice and data services from virtually anywhere in over 100 countries. Founded
in 1991 and funded with in excess of $4 billion of debt and equity, Globalstar
launched over 50 satellites which are in low earth orbit and provide the
backbone for the system. Thermo acquired substantially all of Globalstar's
assets in 2004. Thermo believes that satellite communication for both voice and
data represents a small, but growing, and vital subset of the communications
marketplace. Given its global reach, the system's ability to transmit voice and
data inexpensively from locations unserved by any other communications
infrastructure, and new sponsorship from Thermo, Globalstar is expected to grow
both revenues and profits dramatically. In 2009, Globalstar completed a $738
million financing for its second generation of satellites and network.
- Thermo Credit LLC ("Thermo Credit"
www.thermocredit.com). Thermo Credit is a receivables
funding company focused on opportunities in the telecommunications industry.
Thermo believes that there is a growing demand for capital from small companies
with sales of $10 - $25 million a year who because of their size and their
exposure to the telecommunications industry cannot raise sufficient capital to
run and grow their businesses. Thermo believes that there is no other
receivables focused finance and factoring company solely focused on this
micro-cap, telecommunications niche, and as such believes that there is
significant opportunity for a telecommunications factoring company due to the
large size of the market opportunity, the barriers to entry, and positive
growth in the telecommunications industry.
- Meritage Private Equity Fund, L.P. ("Meritage"
www.meritagefunds.com). Meritage provides private equity
to companies focused on communications networks and communications services
with areas of focus in broadband, wireless and outsourced services. Thermo is
an investor in the fund which is primarily an investor in early stage growth
companies. Thermo has also made direct co-investments in Meritage portfolio
companies including Xspedius Communications.
- Open Range Communications ("Open Range"
www.openrangecomm.com). Open Range is a Broadband wireless
Internet services provider whose primary focus is delivering wireless high
speed Internet and voice services to hundreds of un-served and under-served
communities across America. Globalstar made a critical early stage investment
in the company and helped arrange Open Range's spectrum licensing agreement
with Globalstar. Open Range received subsequent investments of $100 million and
$267 million from One Equity Partners, the private equity arm of JP Morgan
Chase and U.S. Department of Agriculture's Rural Development Utilities Program
respectively.
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