He’s back. Chester Davenport, the former head of the Sunnyvale, California-based emissions-testing firm Envirotest and a familiar name to black enterprise readers, recently purchased a small percentage of Ameritech Corp.’s wireless telephone business for roughly $60 million. Davenport’s return takes the form of a joint venture between Georgetown Partners, a Bethesda, Maryland, private investment firm he founded in 1989 and of which he is managing director, and GTE Corp.
Although Davenport vanished from the be 100s listings after selling Envirotest to Stone Rivet Inc. in 1998 for approximately $266 million, he’ll tell you he never actually went away. Rather, he was simply planning his next strategic move.
But how did Davenport go from an emissions-testing firm to the wireless telephone business? He says he was simply looking at the best available opportunities after getting out of emissions testing and wireless was the way to go.
“There were a lot of mergers going on in the telecommunications industry, and we knew certain properties would have to be divested,” Davenport recalls. Federal regulations prohibit companies from owning multiple wireless phone licenses in a single market. So when word spread of SBC Communications Inc.’s pending $62 billion acquisition of Ameritech, Davenport realized many of the overlapping properties owned by the firms in Chicago and St. Louis would be up for sale or auction.
Davenport initially tried to buy those properties on his own, but decided to strategically partner with another firm. “It’s a very competitive business that requires a lot of dollars not only to buy into, but to operate at a peak level. A lone financial player, no matter who it is, wouldn’t be as successful as a company that has all the advantages of [experience],” says Davenport.
So in April, Georgetown Partners and GTE Corp. formed a joint venture to buy the properties Ameritech was divesting. GTE picked up about 93% of the Ameritech properties. Davenport’s portion of the deal, approximately 7%, will operate as Davenport Cellular, which will provide wireless service in the St. Louis and Chicago areas. Ironically, Davenport will be competing for business in those markets with the same companies he bought the properties from. But Davenport says he will focus on building up underserved minority markets and exploring ways to attract new customers. “It’s a very big deal for us,” he says.
These are exactly the types of deals and alliances the Rev. Jesse Jackson had in mind when he created the Wall Street Project. Earlier this year, Jackson’s conference invited telecommunications industry giants and minority entrepreneurs to attend in hopes of creating networking opportunities. At the last conference GTE, SBC and Ameritech each agreed to direct between $50 million and $100 million of their pension funds to minority money managers.