xG Technology inks key base-station deal
Florida-based broadband solutions provider xG Technology this week announced that private company Treco International has made a $75 million order for 1000 of its new BSN250 base stations to be deployed in the United States.
Rick Mooers, chairman and CEO of xG Technology, said the deal helps ensure that his company will not need to access tight financial markets for the near future.
“Given that we have 75-80% margins on our product, this contract will be extremely lucrative for xG, which is a requirement in these hostile financial markets,” Mooers said during an interview with Urgent Communications. “We’re funding the company the old-fashioned way, through its own operations.”
The BSN250 base stations leverage xG Technology’s proprietary xMAX technology and are designed to delivery mobile voice-over-IP services using unlicensed spectrum in the 900 MHz band. Handsets that can work either on an xMAX network or a Wi-Fi network are scheduled for mass production by early next year. Mooers has expressed hope that tests will demonstrate that xMAX meets specifications for fourth-generation wireless technologies.
Under the terms of the deal, Treco also has an option to buy another 4000 BSN250 base stations at the same $75,000-per-unit price, or $300,000. Treco plans to deploy xMAX base stations in the U.S. and lease the infrastructure to regional carriers that want to provide xMAX services to customers, which could help a address a major issue in xG Technology’s rollout plans, Mooers said.
“The big issue that you run into in this market is that people can’t finance their capital costs,” he said. “Whether you’re building a factory or buying this capital equipment, most people—especially the second- and third-tier guys we’re going to—don’t have that cash in the till to pay [for base stations up front].”
Treco International is a private firm that has the same beneficial ownership as Casper Holdings, a 4.4% shareholder in xG Technology. Although Mooers confirmed that Treco is a “completely separate entity” from xG Technology, he did not provide additional detail about the customer’s background.
“It’s not public information unless they want it to be,” Mooers said.