Case #416

$25 million wireless phone service provider

This regional wireless phone company provides service in the Great Lakes region, using GSM format as a T Mobile (previously Voice Stream) affiliate. Its market area has generally a low-density population (1.1M POPS), but gets heavy seasonal tourism traffic.

Despite earning $25 million in annual revenues, this highly leveraged, poorly managed family business was losing money, and had poor financial reporting and a strong-willed, entrepeneurial owner. In fact, the company had very weak management and poor business systems, and its debt had reached $50 million.

After Morris-Anderson & Associates’ assessment, it was agreed that an interim COO was needed. Our crew cut costs, helped convert to new core-business systems, negotiated several major “over-hanging” creditor disputes, and helped negotiate improved agreements with several telecom vendors and expand roaming revenue sources by limiting leakage while consolidating pricing and service offerings.

After the changes were implemented, the company moved from an approximately $1 million annual EBITDA loss to a $1 million EBITDA profit. Additionally, due to proactive negotiation efforts, the company survived several clear forced-bankruptcy threats by creditors. The core business system upgrade/conversion has reduced costs, increased revenue, accelerated invoicing and cash, and significantly improved customer service and operational control.

This case is a clear example of the need to supplement turnaround skills with select industry knowledge as well as systems expertise to provide a complete solution. Our crew deftly handled a difficult entrepreneurial personality, repairing historical damage done to critically important vendor relations.