Firm Finds Success In Transferring Data, Attracting Suitors
WILTEL may be the largest little-known telecommunications company in the United States. That's because nine years ago, the company did not exist, and its parent firm, Tulsa, Okla.-based Williams Companies, was focused on energy, not information.
But that's changing. With 4,600 employees, WilTel officials say they expect revenues to reach $1.25 billion this year. WilTel, which operates the fourth-largest US fiber-optic network, has carved out a niche on the ``information highway.'' Its success has gained attention from corporate suitors worldwide. It may soon strike a deal, aligning itself with a major international company.
In 1985, Williams's directors had a surfeit of aging oil and gas pipelines. Some engineers realized that the rights-of-way and buried pipelines were valuable assets. They suggested running fiber-optic lines through pipelines. Within months, they carried thousands of phone calls for various phone companies. ``Putting fiber in pipelines, we were just getting our toe in the water,'' says Roy Wilkens, WilTel's president and CEO. ``Once we got our toe in the water, we saw other opportunities we liked.''
Mr. Wilkens says WilTel has grown by concentrating on business and government users who need to transfer data to far-flung office sites. Gaining access to these users required little advertising. WilTel, thus, stayed anonymous, while MCI, Sprint, and AT&T spent millions courting residential users. (Wilkens says it will advertise in coming months to increase public name recognition.)
By specializing in nonvoice communications for businesses, WilTel has become a leader in asynchronous transfer mode and other data-transfer technologies. It has a long TV client list. ABC, NBC, CBS, CNN, and ESPN use WilTel's fiber to transfer video signals. The networks prefer fiber-optic transmission because satellite transmission is often disrupted by bad weather. WilTel's system offers a better alternative to satellites with better video reproduction. The last four Super Bowl games were relayed to networks via Vyvx, WilTel's TV services subsidiary.
Over the next few months, the company says it expects to win Federal Communications Commission approval to lay the first fiber-optic line to Cuba. It also expects to provide service to Asia and Europe. WilTel's 1994 revenues will double 1991 revenues.
Other companies have taken note. In May, Williams's directors turned down a $2 billion buyout offer from long-distance carrier LDDS Communications Inc. Some shareholders filed a lawsuit, saying Williams's board should have considered the offer.
Daniel Briere, president of New Jersey-based TeleChoice Inc., says WilTel is an attractive takeover target. ``A lot of leading foreign carriers have talked about joining with them,'' he says. WilTel is now talking with Cable & Wireless Plc., a British phone company, he says. ``It would be a good fit for WilTel and a great deal for Cable & Wireless,'' Mr. Briere adds.
WilTel spokesman Gil Broyles admits that WilTel needs the British company's connections, and that the two firms are negotiating. ``But it's not anything we are ready to make an announcement about,'' he says. ``Discussions are open and ongoing.''
While a merger, acquisition, or partnership appears imminent, Williams Companies still operates its main businesses, which include pipeline and natural-gas production and processing facilities. Last year, WilTel accounted for almost 40 percent of Williams Companies' $2.44 billion in revenues. Within a few years, the firm expects 60 percent of revenues to come from WilTel.
Comparing the businesses, Miller Williams, son of a company founder, says: ``WilTel is similar to a natural-gas or oil-pipeline company. But instead of carrying barrels, we're carrying bits.''