Pipex Wireless, the leading contender to offer WiMax services in the UK, is "under review" after the sale of Pipex' consumer broadband division.
Pipex, one of two national licence holders for WiMax in the United Kingdom, sold its consumer broadband and voice units to Italian ISP Tiscali for £210 million last week, as the first major outcome from a four-month strategic review of the entire group carried out by investment bank UBS.
Three Pipex units remain: Web Hosting, Business Services, and Pipex Wireless, a joint venture between Pipex and chip giant Intel, that is planning to roll out services using Pipex' licence - one of only two suitable for a national wireless broadband service using WiMax. The other licence is held by PCCW.
Pipex Wireless has already rolled out trial WiMax networks in Milton Keynes, Warwick and Leamington Spa, and has discussed plans for a commercial launch of the business in Manchester later this year - but a Pipex spokesperson confirmed to Techworld that all the remaining Pipex businesses were “still under review.”
“The strategic review announced in March remains in progress regarding the Group’s other businesses, which continue to show strong growth in all areas,” said Pipex executive chairman Peter Dubens last week.
Earlier this year, rumours circulated that BT was considering making an offer of £350 million for the whole of Pipex, in order to get its hands on its Wimax licence. However a deal never materialised, amid speculation that BT would instead wait for a new licence auction rather than acquiring an existing operator.
“At the moment, Ofcom is consulting on auctioning off 2.6GHz spectrum, which is potentially suitable for WiMax,” a spokeswoman for the UK telecoms regulator told Techworld. “A possible award could take place in early 2008.”
But in the meantime, as WiMax matures as a technology, Pipex Wireless remains an attractive option. “The idea I get is that Pipex is holding onto Pipex Wireless like a pet project,” said Jonathan Coham, an analyst at Ovum’s consumer practise group. “I wonder whether they are holding onto it in order to potentially make a bold statement in the next few months.”
“Certainly, a sell off is an option, but Pipex also realises that it needs to do more to up the value of the unit,” Coham added. “The question is whether Pipex will opt to build up the Pipex Wireless business itself, or put it up for sale.”
Rolling out WiMax networks does not come cheap, as US operator Sprint Nextel has discovered. Sprint is already committed to spending $3 billion on a US-based WiMax network, but was last month reportedly considering a partnership with rival Wimax operator Clearwire to help fund the build costs of that network.
It is clear that Pipex doesn’t have the same financial resources as Sprint Nextel, even though it has the backing of Intel. The question remains whether the £210 million from the sale of Pipex’s consumer voice and broadband units will be used to build up Pipex Wireless, or whether the cash will be returned to shareholders.