Start-up telco NorthPoint files for IPO

Competitive carrier NorthPoint Communications intends to make a $125 million public offering of stock, the third player to court investors in recent months.

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NorthPoint Communications intends to make a $125 million public offering of stock, the third competitive carrier to court investors in recent months.

NorthPoint expects to raise as much as $125 million based on the filing fee reported in documents filed today with the Securities and Exchange Commission for an IPO. The San Francisco, California, company has been one of several aggressive new players in the telecommunications market since deregulation swept through the industry three years ago.

Companies such as NorthPoint, Covad Communications, and Rhythms NetConnections are angling to offer high-speed data services to business customers, but need large infusions of cash to do so. These data-centric competitive local exchange carriers (CLECs), are focused on installing and selling digital subscriber lines (DSL), a technology that allows for high-speed data transmissions over standard copper telephone wires.

Competitor Covad was the first to go public with an offering in January. The company's strong showing cleared the way for Rhythms NetConnections, which filed to go public in a $165 million offering earlier this month.

"[NorthPoint is] really well-positioned in the market," said Lisa Pelgrim, DSL analyst for Dataquest. "They've had a quick rollout and they've done a very good job of selling SDSL [symmetric digital subscriber line] services to businesses."

NorthPoint currently offers service in 12 metropolitan areas and plans to offer DSL in 28 cities by the end of the year, the company said in its S-1 registration statement.

The company did not indicate how many shares it will make available or at what price range it intends to offer the shares. Covad priced its offering at $18 per share after increasing its range to $16 to $18 per share. NorthPoint said it would use the capital it raises to continue the buildout of its service regions.

Formed in May 1997, NorthPoint posted a net loss of $25.9 million, or $2.39 cents a share, on revenue of $931,000 for the year ended December 31, 1998.

Business ISP Verio invested $5.6 million in NorthPoint two weeks ago. Intel, @Work (the business division of @Home Network) and venture capital firms Carlyle Group, Microsoft cofounder Paul Allen's Vulcan Ventures, Benchmark Capital, Accel Partners, and Greylock are investors in NorthPoint.

Benchmark venture partner and former Federal Communications Commission chairman Reed Hundt is a member of the NorthPoint board of directors. Michael Malaga is the company's chief executive.

The company has proposed trading on the Nasdaq National Market under the ticker symbol "NPNT."

Underwriters for the IPO are Goldman Sachs, Morgan Stanley Dean Witter, and Credit Suisse First Boston.