ALEXANDRIA, Va. -- Metrocall Inc. said it has agreed to buy Mid-Atlantic Paging Co., operator of the FirstPage system. The acquisition will double its customer base to 500,000 subscribers.
Alexandria-based Metrocall said it has agreed to issue 3 million shares of stock and assume $53 million in debt for Mid-Atlantic. Metrocall stock closed up 62.5 cents yesterday, at $17.375.
Metrocall said the acquisition of Mid-Atlantic will make it the nation's second-largest publicly held paging company, behind Dallas-based Paging Network Inc., with 3 million subscribers. It will overtake Jackson, Miss.-based Mobile Telecommunication Technology Corp., or Mtel, which has about 350,000 subscribers.
Metrocall has more than 70,000 subscribers in the Baltimore-Washington area, a spokesman said. A spokeswoman for Mid-Atlantic would not say how many local subscribers the company has.
Metrocall said Mid-Atlantic's sales have grown at a compound annual rate of 140 percent over the past three years. The FirstPage system is strong along the Atlantic seaboard from Massachusetts to Virginia, complementing Metrocall's operations in that region. FirstPage also has a nationwide paging license, giving Metrocall two channels over which to operate its nationwide system.
"It's a fit geographically. There are immediate synergies, and we see tremendous opportunities for efficiency going forward," said Christopher Kidd, Metrocall's chief executive.
Paging companies are rapidly consolidating in the face of a grueling price war and huge capital demands to install new digital equipment. While Metrocall and others hope to capitalize on a new wave of "personal digital assistants" and other wireless devices that will receive data over their networks, for now the industry derives virtually all its revenue from traditional, one-way paging services.
"There was a day when basic paging service cost $16 a month, and that was when $16 was a lot of money," said John Bain, analyst with Raymond James & Associates in St. Petersburg, Fla. "Now basic service costs as little as $5.95."
Metrocall, which went public at $13 a share in July, is expected to report fourth-quarter earnings today. Mr. Bain said he estimates the company will earn $3.3 million, or 50 cents a share. That compares with huge losses reported at PageNet and Mtel as they invest millions of dollars in digital equipment.
Metrocall operates paging systems in the Mid-Atlantic region, California and Nevada.