Live Deals: CSFB-Led Group Wireless Co. –

Putting faith in fixed wireless technology, CSFB Advisory Partners, Welsh Carson Anderson & Stowe, Microsoft Corp. and Cascade Investments teamed up to invest $900 million in publicly-traded WinStar Communications, a fixed wireless services provider.

The investment, which is slated to close this month, will be in the form of convertible preferred stock that can be converted into common stock at $67.50 per share, giving the investor group a 13% stake in the company.

Hartley Rogers, a managing director at CSFB Advisory Partners, said his group will be a co-lead investor in the transaction, with an initial investment of $400 million that will be partially sold down to co-investors. CSFB’s investment will settle at between $250 million and $300 million, he said.

Welsh Carson and Microsoft will both commit approximately $250 million, while Cascade Investments, one of the personal investment companies of Microsoft Chairman Bill Gates, will invest approximately $25 million.

New York-based WinStar uses wireless antennas placed on top of buildings to provide phone and Internet services to small- and medium-sized businesses.

Rogers said WinStar has compelling and efficient technology in a sector that is attractive and growing. The company is in the middle of a rollout of its networks, adding switches, channels and hubsites, he added. The investment will help execute the company’s growth plan by funding the rollout, he said.

“It is impossible for a fund of our size to ignore the information revolution that is focused on broadband,” Rogers said. “It makes for compelling investment opportunities.”

WinStar offers its services in more than 70 markets throughout the U.S. and in Europe, Asia and South America. It is the largest holder of broadband fixed wireless spectrum, with licenses in the top 60 U.S. markets.

In addition to its wireless services, WinStar launched Office.com, an Internet site where users can access integrated content, commerce and communications tools, in the third quarter of 1999. The site also provides information on the latest business trends and strategies, forums with business leaders, and marketing, legal and technical information to businesses.

Wave of Wireless

The $900 million investment in WinStar marks the third investment in the last two months in fixed wireless communications companies by private equity firms and the second wireless communications deal in which Microsoft has invested alongside private equity firms.

In November, Dallas-based investment giant Hicks, Muse, Tate & Furst joined Microsoft and several other private equity firms to invest a combined $500 million in Teligent, also a wireless communications provider to small- and medium-sized businesses.

Last month, Forstmann Little & Co. committed $850 million to NextLink Communications Inc, which provides broadband communications services to businesses over fiber optic and broadband wireless facilities.

WinStar and Microsoft will pursue a joint sales and marketing program, which will include a national seminar program, sales referrals and participation at trade shows. The two companies will market multimedia services for the Internet to businesses.

Additionally, Microsoft will license its products to WinStar while WinStar, which is testing Microsoft Online products, will provide Office 2000 and other applications services to WinStar customers using its network and Internet data centers.

WinStar’s shares at press time closed at $73 up from a 10-month low of $30 in March.