November 1, 2017 / 11:11 PM / 2 months ago

Qualcomm, JMC seek to exit Alphabet-backed New York WiFi project -sources

SAN FRANCISCO, Nov 1 (Reuters) - Chipmaker Qualcomm Inc and private equity firm JMC Capital Partners are looking to sell their stakes in a joint venture that operates more than 1,300 free WiFi kiosks fashioned from old phone booths around New York City, according to people familiar with the matter.

The move is the latest twist in the project overseen by Daniel Doctoroff, former chief executive of news and data provider Bloomberg LP and former deputy mayor of New York City. He now runs Sidewalk Labs, an urban development unit of Google parent Alphabet Inc. Doctoroff is chairman of a Sidewalk Labs subsidiary that is the top investor in the joint venture.

Qualcomm and JMC are working with an investment bank to explore the sale of their stakes in CityBridge, the venture that is behind the LinkNYC WiFi project, the people said, asking not to be identified because the matter is private.

Qualcomm is seeking to exit the venture because it views it as non-core, while the private equity firm JMC is aiming to generate a profitable return on its investment, the people said.

Qualcomm and Sidewalk Labs declined to comment. JMC did not immediately respond to a request for comment.

A spokeswoman for New York City’s Information Technology & Telecommunications Department said in a statement that the city would have to approve any changes and so far ”nothing has been presented to us. Any decision we make has to center around continuing the success of the program and ensuring New Yorkers’ best interests are met.”

LinkNYC emerged in 2014 as part of a 12-year contract with New York City to replace 7,500 payphone stands and was expected to generate $500 million in revenue for the city’s coffers. LinkNYC said on Wednesday that since they launched in 2016 more than 2.7 million people had registered to use the kiosks, which also have phone charging stations and free calling services.

Qualcomm and JMC each invested about $25 million into the joint venture in 2014, the sources said.

Another $50 million came from an outdoor advertising company and a software firm that were later bought by Sidewalk Labs and merged under the name Intersection. LinkNYC kiosks generate revenue through ad sales.

Sidewalk Labs, which already owns more half of the joint venture through Intersection, could be a potential acquirer of the stakes, according to one of the people familiar with the matter. Sidewalk Labs declined to comment on its potential interest.

Large wireless carriers such as Verizon Communications and AT&T could potentially be good partners as well in the joint venture, according to the sources. Verizon and AT&T could not immediately be reached for comment.

Sidewalk Labs’ Intersection expanded its network of Internet kiosks to London in June, turning on the first of 1,000 expected to be installed with Britain broadband provider BT and a local advertising firm. On Wednesday, Sidewalk Labs announced plans to open 100 kiosks in Philadelphia without any business partners starting next year. (Reporting by Liana B. Baker and Paresh Dave in San Francisco; Editing by Cynthia Osterman)

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