Ionica struggles on against insolvency rumours
Company still looking for partner, but price must be an issue
Struggling fixed wireless phone company Ionica is doggedly denying rumours today that it has hit a brick wall, and headed for insolvency. The company, which appointed a new chairman yesterday, has made no secret of the fact that it needs to find a 'strategic partner' if it is to live, but claims the search goes on. Ionica's big problem is that it didn't achieve critical mass before the whole thing started to go pear-shaped. Its unique selling proposition, that Wireless Local Loop (WLL) technology could be deployed cheaply across the UK in order for it to compete directly with BT for subscribers, was undermined by congestion problems in its first markets. Attempts to fix these with extra hardware had to take precedence over rolling out the service further, and Ionica swung instantly from stock market start-up darling to basket case. Its bankers wouldn't advance more money, partner Nortel wouldn't bale it out (and said it would be closing the factory that builds the Proximity gear Ionica uses earlier this week), so Ionica continues the forlorn quest for a cash injection. The new chairman may be a positive sign. Anthony Coleman moves in after a stint as finance director of Yorkshire Electricity, and may face the prospect of strong-arming existing investors to accept half a loaf. Ionica currently claims its cash resources of £45 million will keep it going until January. Paradoxically, the original business plan still looks perfectly viable. If, say, a cellular company, a new entrant like Energis or maybe even WorldCom moved in, all would be lovely in the garden again. The main obstacle, effectively, is that any buyer would under current circumstances drive a very hard bargain. ® Click for more stories
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