Starry Internet CEO Chet Kanojia outlined the possibility of a full or partial sale of the company during a brief call to discuss Q3 numbers which showed mounting losses.
Kanojia stated the US-based fixed wireless access service provider hired PJT Partners in late October to advise the board on M&A, raising capital and a path to profitability in late October, with options including a full or partial sale.
Recon Analytics analyst Roger Entner told Mobile World Live the exploration of strategic alternatives was a bad omen for Starry Internet. “The bottom falls out because interest rates are going up and the financial climate for companies like Starry is decidedly hostile.”
Entner explained Starry Internet’s main focus of serving multi-dwelling units (MDUs) is problematic in terms of access to buildings, which offset the potential benefits of covering multiple subscribers.
Kanojia noted a decision to back out of the US Federal Communication Commission’s Rural Digital Opportunity Fund, along with cutting its workforce in half and halting expansion, freed-up an additional $17 million in cash, which could make it more attractive to potential investors or buyers.
The company ended Q3 with $29.4 million in cash.
“I’m confident that the right solution will emerge,” Kanojia stated, adding Starry Internet’s problems “are funding-related” rather than operational, technical “or demand” based.
Kanojia stated the $155 million it raised when it became publicly-traded in March was less than half of what it expected.
“My firm belief is with the right capital structure, we have the right opportunity for significant growth and profitability ahead of us,” the CEO stated.
Net additions in Q3 were a record 10,347, taking its customer tally to 91,297, up 66 per cent year-on-year.
Revenue of $8 million was up 36 per cent with a net loss of $60.3 million compared with $39.8 million.
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