Alaska Communications and General Communication, Inc. (GCI) inked a deal in which GCI will pay $300 million for Alaska Communications' wireless assets and subscriber base and its 33 percent stake their network venture, the Alaska Wireless Network.
The agreement between the two partners marks yet another smaller carrier that is exiting the wireless business. Alaska Communications said it plans to focus on wired broadband and IT solutions, which the company said is the largest part of its business. The company said it will use $250 million to pay down debt, which will allow it to invest in its network and home broadband service. The deal is expected to close in the first quarter of 2015.
In a statement, Alaska Communications said its wireless customers' contracts, pricing and network will not change right now and its wireless customers do not need to do anything. The company will transition wireless contracts to GCI in the first part of 2015. Alaska Communications said it will contact its wireless customers with details about the transition. However, until then Alaska Communications will continue serving its wireless subscribers through its stores, contact center, authorized agents, account representatives and online.
"Selling our wireless business increases attention to our greatest areas of growth and highest levels of profitability," Alaska Communications CEO Anand Vadapalli said in a statement.
Alaska Communications had approximately 109,000 wireless customers at the end of September. Combined, the GCI and Alaska Communications serve more than 260,000 wireless subscribers, according to the Juneau Empire.
"We have service-level agreements that should make this as smooth as possible," David Morris, GCI's vice president of corporate communications, told the Alaska Dispatch News. "ACS does have a specific billing system, so we will need to create a similar billing system and integrate that in our back office and train the employees, but ACS will be helping us every step of the way."
Since the summer of 2013, Alaska Communications and GCI have cooperatively operated the Alaska Wireless Network (AWN), a venture that was created to design and operate a statewide wireless network to deliver wireless service for the two carriers. The companies contributed to the AWN their respective wireless assets, including spectrum licenses, cell sites and backhaul facilities, switching systems and other assets. The AWN was seen as a way for the companies to compete against AT&T Mobility (NYSE: T), which has the most Alaska customers of any wireless carrier, according to the Juneau Empire. The network deal was also designed to fend off encroachment from Verizon Wireless (NYSE: VZ).
Earlier this fall, Verizon launched voice service on its own network in Alaska to complement its LTE data network and bring more competition to the country's northernmost state. Sprint (NYSE:S) and T-Mobile US (NYSE:TMUS) do not currently offer LTE coverage in Alaska but do offer service in the state. In September GCI announced an LTE roaming agreement with T-Mobile.
Alaska Communications' decision to get out of wireless is part of a larger trend of smaller carriers that have sold their spectrum or gone out of business during the past few years. Other wireless carriers that have announced plans to exit or withdraw from the space include Cincinnati Bell Wireless, Revol Wireless, Mobi PCS, Plateau Wireless, Cellular One in Wyoming and Montana, AirFire Mobile and others. A spokeswoman for the Competitive Carriers Association, which represents the interests of smaller carriers, did not immediately have a comment.
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