Fonix Corp., a Salt Lake City provider of speech interface solutions, has signed an agreement in principle to acquire all of the capital stock of LTEL Holdings.
Privately held LTEL has two wholly owned subsidiaries: LecStar Telecom, an Atlanta-based competitive local exchange carrier, and its sister company, LecStar Datanet, a provider of Internet services to business and residential customers.
The stock and debt transaction will involve consideration valued at $33 million. The transaction provides seller financing on terms favorable to Fonix.
The acquisition of LecStar is anticipated to accelerate Fonix’s growth strategy by providing a recurring revenue stream, a growing customer base and new marketing channels. LecStar’s revenue grew from $4.9 million in 2001 to $9.7 million in 2002 and the company expects to report approximately $16 million in revenue for this year.
LecStar’s customers also offer a direct marketing and distribution channel for Fonix’s speech technologies and solutions. Fonix will bundle telephony and mobile/wireless speech interface solutions with LecStar’s telecommunications services.
In addition, LecStar’s utility partnerships offer opportunities to expand Fonix’s marketing channel with system integrators like Meridian, which recently deployed its voice-enabled 511 road traffic information system featuring the Fonix speech solution.
Fonix says it also will pursue its position on Microsoft platforms such as Xbox, PocketPC and SmartPhone mobile/wireless devices, as well as Symbian devices. Fonix will continue its integrated corporate collaborations with Motorola, Intel, Hitachi, Renesas, Oracle and Seiko Epson.
The acquisition of LecStar will enable Fonix to seek opportunities to acquire other local exchange carriers to further expand the existing customer base, the company says.