Crushing the Copper Mile

Article excerpt

These days, it's not so unusual for the heir-apparent of a Fortune 100 company to jump ship to steer a start-up. But Alex Mandl, who left the post of president at AT&T to lead telecommunications company Teligent as president and CEO, was part of the early wave of defectors.

"Three things converged at the same time," says Mandl of his 1996 decision to leave AT&T. I realized that I had an interest in doing something more entrepreneurial. Also, at about the same time, Bob Allen declared after the breakup of Lucent and NCR that he would stay on for four more years to run the remaining AT&T. That was not a great plus from my career perspective. And at that time, a group approached me and started outlining this new opportunity. it was not an easy decision, but there clearly were enormous opportunities in being a new competitor in an evolving industry."

It didn't hurt, of course, that Mandl also received a signing bonus of reportedly $20 million and an 18 percent stake in any increase in the company's market value. He still found himself suddenly with no staff and only an idea for a company. I started out in an office that someone lent me. it had a desk and chair. So creating something from absolutely nothingby sitting at a desk and having a piece of paper in front of you and starting to make some notes to build something like Teligent-was just an awesome challenge. It was interesting and maybe a little scary at times, but also enormously satisfying."

The plan was to build local telecommunications networks using antennas on customer buildings. These units would transmit data to a base unit in the area, which would then connect into local and long distance telephone lines and the Internet. This wireless broadband approach allowed smalland medium-size businesses to circumvent the slower and often more expensive "copper mile," the local phone system that connects to the faster fiber networks of the long distance carriers, The bottom line for the customer would be faster Internet access, enhanced video and data capabilities, and local and long distance calling all using a single carrierat a 30 percent savings compared to what the Bell system provides.

In 1997, Teligent went public, and it now has a war chest of approximately $2 billion, most recently from a $500 million investment led by Microsoft, and $16.3 million in sales for the 12 months ending September 1999. And while they are still a start-up, with no earnings and only enough in the coffers to last until 2001, Mandl does have his own office and now oversees 3,000 employees. He has also met or exceeded all of Wall Street's expectations: "Alex promised The Street they would be in 40 markets by '99 and they were, capping the fastest roll-out anywhere" in telecommunications, says Paine Webber analyst John Hodulik, who lauds Mandl's Fortune 100 pedigree. …