Alaska Communications (ACS) has reached a deal to sell off its remaining wireless assets for $300 million to GCI Communications in a move that it says will help it deleverage its balance sheet while sharpening its focus on residential and business broadband services.
Under the terms of the agreement, ACS will sell its 33 percent interest in the Alaska wireless network and its subscriber base, a transaction they expect to close in the first quarter of 2015.
By having a stronger balance sheet, combined with top line and bottom line growth, ACS said it will be able to evaluate various opportunities to increase shareholder value.
"Upon closing, we will significantly strengthen our balance sheet by reducing debt by $250 million," said Alaska Communications President and CEO Anand Vadapalli, in a release. "Following closing, we expect to improve Adjusted EBITDA by creating synergies of approximately $12 million. Together with eliminating the overhang from wireless, this will reveal the underlying inherent value of our broadband and managed IT solutions business, opening gateways for new opportunities to create shareholder value."
As the service provider exits the wireless business, Alaska Communications will incur costs associated with the transaction that include wind-down costs of its retail stores, fees and expenses, purchase price adjustments and taxes. The service provider expects that proceeds net of these items will be about $250 million.
One area that the sale will help it focus on is broadening its focus on delivering broadband services to its residential and business customer bases. Each year ACS invests about $40 million in its business, with broadband service being a key focus.
The service provider said in a Q&A document outlining the deal that "Businesses and customers with Business or Home Internet will benefit from the company's increased focus on and investment in broadband and managed IT services."
In the business arena, ACS said it has won new broadband service deals with a number of key business customers, including Anchorage School District and the State of Alaska.
ACS has been enhancing its broadband service offerings, unveiling a 50 Mbps speed tier with unlimited data usage in Juneau in November and a 1 Gbps service for local businesses in Anchorage thanks to an ongoing expansion of its fiber network.
Alaska Communications joins a number of other regional service providers that have decided to shed their wireless business in order to focus on their enhancing their portfolio of next-gen wireline services.
Fellow independent telco Cincinnati Bell sold its wireless spectrum licenses to Verizon Wireless (NYSE: VZ) for $210 million in April in order to focus more of its attention on its growing wireline-based Fioptics broadband offerings for consumers and small to medium businesses. Earlier, SureWest, which is now part of Consolidated Communications, made a similar move in 2008 when it sold off its wireless holdings to Verizon Wireless as it looked to enhance its focus on its growing copper and fiber to the home (FTTH)-based broadband business.
- see the release
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