Posted: 06/2001
Wholesale Channel
Williams Communications Leaves Home
By Josh Long
When most kids reach a certain age, sometime in the teen years, they think about what it would be like to live on their own.
Executives at Williams Communications Group Inc. (WC, www.williamscommunications.com) have felt that way for a while. They were grateful that their parent company--utility giant Williams (www.williams.com)-- supported them in their mission to create a carrier's carrier. However, for reasons related to autonomy and the folks on Wall Street, these executives knew it was time for them to go out into the world on their own.
In March, WC became a free bird--separating from its parent, after the Williams' board of directors approved a spinoff.
Williams announced in April plans to distribute roughly 400 million shares--or about 95 percent of the WC common stock it owned--to holders of Williams common shares as a tax-free dividend. No longer will WC president and CEO Howard Janzen report to Williams chairman, president and CEO Keith Bailey.
"We hope that will make us a little more nimble and a little more agile in the marketplace," says Wayne Bailey, marketing director at WC. "I think there has probably been some perception [that] we have been owned by this natural gas line and energy company. We are no longer owned by them."
Explains a WC spokeswoman, "We can now become more focused on the telecom side of the business without having to worry about the implications to the energy side of the business."
Analysts have said a spinoff will give WC investors a more distinct picture of the carrier's identity and raise the company's value on Wall Street. The utility industry is a more stable industry--it typically draws a different kind of investor--than the more volatile telecom sector.
"The spinoff gives Williams Communi-cations the best opportunity to strengthen its industry leadership and the ability to attract investors who value the potential of broadband," Janzen said in a statement.
Bailey says, "We are not going to change our strategy. We are still remaining in the same target markets. Our target markets are large bandwidth-centric customers or businesses built on bandwidth."
In the wake of the spinoff, WC announced the appointments of three new board members: John A. (Ian) Craig, former Nortel Networks Ltd. (www.nortelnetworks.com) executive vice president and chief marketing officer; Morgan O'Brien, vice chairman of Nextel Communications Inc. (www.nextel.com); and Julius W. Erving (Dr. J), the former Philadelphia 76ers' basketball superstar, who is president of The Erving Group Inc. and senior vice president of the Orlando Magic (www.nba.com/magic).
