Cincinnati Bell sheds wireless assets for $210M, sharpens Fioptics, business service focus
Cincinnati Bell confirmed that it will sell its wireless spectrum licenses to Verizon Wireless (NYSE: VZ) for $210 million, a move that should allow it to more effectively focus on its growing wireline-based Fioptics broadband offerings for consumers and small to medium businesses.
Under the terms of the agreement, Cincinnati Bell Wireless will sell Verizon Wireless all of its wireless spectrum licenses for cash consideration of $194 million. In addition, Verizon Wireless will assume certain tower lease obligations.
Cincinnati Bell said that it would notify its customers with further details regarding any transition assistance around the time of the closing, which is expected to be in the second half of 2014.
While this deal will get the attention of the wireless industry with another regional wireless operator putting more spectrum into the hands of Verizon Wireless, the other side of the story for Cincinnati Bell is that it will be able to devote all of its attention to the Fioptics product line.
"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," said Ted Torbeck, president and CEO of Cincinnati Bell, in a statement. "This transaction 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 our Fioptics suite of products."
Fioptics has been a savior for Cincinnati Bell at a time when its traditional wireline business has been flattening due to ongoing erosion in its traditional POTS voice business. During the fourth quarter, Cincinnati Bell reported that Fioptics revenues rose 49 percent year-over-year to $29 million, while local voice service revenues declined year-over-year to $54.7 million.
Cincinnati Bell is hardly the first wireline telco to sell off its struggling wireless business to a wireless operator. SureWest, which is now part of Consolidated Communications, made a similar move in 2008 when it sold off its wireless holdings also to Verizon Wireless as it looked to enhance its focus on its growing copper and fiber to the home (FTTH)-based broadband business.
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