Cincinnati Bell quits wireless business, will sell spectrum to Verizon for $210M
Verizon Wireless (NYSE:VZ) will buy Cincinnati Bell's wireless spectrum in a deal valued at $210 million, effectively ending the regional carrier's wireless operations. According to Strategy Analytics, Cincinnati Bell is the nation's ninth largest wireless carrier.
Cincinnati Bell Wireless, or CBW, will sell to Verizon all of its wireless spectrum licenses for $194 million in cash. CBW holds licenses for PCS, AWS and 700 MHz spectrum in Ohio. Verizon will also assume certain tower lease obligations. CBW said it will notify its customers with more details around the time the deal closes, which is expected to be sometime in the second half of 2014.
CBW said it expects to continue to provide wireless service for the next eight to 12 months and that its customers do not need to do anything right now. The company said it will, for a nominal charge, lease back the spectrum it is selling for a period of time following the closing of the deal, and will then wind down its wireless network operations and help customers in transitioning their service to Verizon or other carriers.
"We appreciate the loyal support from our Cincinnati Bell Wireless customers over the last sixteen years, and we remain committed to providing them with wireless service and support throughout the transition period," Cincinnati Bell CEO Ted Torbeck said in a statement. Torbeck said the deal "is an important step toward increasing focus on our growing strategic product base."
Deutsche Bank analysts had written in a March 11 report that Cincinnati Bell might sell its wireless business because it can't afford to invest in LTE. Indeed, Torbeck said "it has become economically challenging for us to invest in our wireless business at the levels necessary to deliver best-in-class service to our customers." He said the deal "not only ensures that our customers have access to top-tier wireless service, but it also gives us increased flexibility to meet their growing demand" for the company's fiber-optics communication products.
The deal is another indication that smaller regional carriers are finding it increasingly difficult to invest in LTE, as evidenced by AT&T's (NYSE:T) purchase of Cricket provider Leap Wireless, which closed in March. However, Sprint (NYSE:S) recently announced new partnerships with the Competitive Carriers Association and the NetAmerica Alliance that the carrier hopes will encourage rural wireless carriers to build LTE networks that Sprint's customers will be able to roam onto.
Separately, Verizon said it will assign its rights to acquire the spectrum licenses being sold by Cincinnati Bell to Grain Management, a private equity firm that invests in the media and telecommunications markets. Verizon will then lease certain of the spectrum licenses from Grain Management.
- see this release
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