PROVO Could Broadweave Networks' acquisition of iProvo become a case study on how to turn a fiscally floundering fiber-optic system into a financially successful network?
Broadweave President Steve Christensen certainly hopes so. And more than two months after taking over the helm of the once-city-owned fiber network, he said Broadweave executives have been surprised to see the system's initial successes.
"We were able to exceed our sales expectations," Christensen said Friday afternoon. "We're surpassing our milestones."
Christensen declined to disclose how many new customers subscribed to Broadweave since it tentatively took over the iProvo network July 1, but he said the company has already managed to sign on some new business clientele that will be announced in the upcoming weeks.
He also said the new monthly subscriber total outstripped the new subscriber rates experienced when the city operated the network. The company provides voice, video and data services to about 75 percent of the estimated 11,000 iProvo customers.
Since its completion, iProvo had experienced sluggish growth, and mounting financial losses. It is estimated the network cost the city around $13.5 million, and was on track to cost another $15.6 million over the next five years. The Provo City Council approved the sale of iProvo to Broadweave for $40.6 million in early June.
Broadweave and Provo were supposed to finalize the sale June 30. Instead, they signed a "modified closing," allowing Broadweave to assume control of the network while final details were hammered out. The deal was sealed Aug. 29.
Broadweave executives anticipated a loss of subscribers during the network transition from Provo to Broadweave, but experience proved otherwise, Christensen said.
"We're winning customers away from the competition," he said.
Not all surprises have turned out so pleasantly for Broadweave. The company made arrangements in mid-May to merge operations with Veracity Communications and to buy up the customers of incumbent service providers MSTARmetro and Nuvont Communications. While Broadweave managed to buy MSTARmetro's customers, it failed to consummate deals with Veracity and Nuvont, who remain on the network.
In hindsight, Christensen said it turned out for the better because now Broadweave can win those customers over to its services instead of just buying them.
"It's our goal to make every resident in Provo a Broadweave customer," he said.
Broadweave also expected Sorenson Capital to make an investment in the company once it acquired iProvo. But at the anticipated September closing, Sorenson Capital announced it had decided the iProvo deal no longer fit the firm's private equity profile. Instead, EsNet Ltd., a local venture capital firm has increased its investment in Broadweave.
Despite the twists and turns, Christensen said the company plans to gradually improve the network and increase customer services as it works to turn the network into a financially viable endeavor."We're close," Christensen said. "And it's only been 72 days."