Toronto-based conglomerate Brookfield Infrastructure Partners LP has struck a deal to buy Cincinnati Bell for $2.6 billion. Under the terms of the cash-and-debt deal, Cincinnati Bell shareholders would receive $10.50 in cash for each share of common stock, or 36% above the company's $7.72 closing price on December 20.
Brookfield is paying just over $529 million, but it also agreed to assume about $2 billion in debt to bring the total to $2.6 billion. The deal, which has been approved by Cincinnati Bell's board of directors, still needs to pass customary regulatory approvals and a vote by the company's shareholders. The deal is expected to close near the end of 2020.
"After thoroughly reviewing a range of strategic alternatives and possible business opportunities for maximizing value, the board determined this transaction was in the best interest of the company, its shareholders, and its customers,'' said Lynn Wentworth, chairman of the Cincinnati Bell board, in a statement.
Cincinnati Bell, which was founded in 1873 as a telegraph company before becoming a Bell System franchisee, owns and operates a data transmission and distribution network in Cincinnati, Ohio and Hawaii, with a footprint of over 1.3 million homes.
In the 1990s, Cincinnati Bell started offering internet access and mobile phone services. The company divested its mobile phone service in 2014 to focus on enterprise and fiber-optic services.
Cincinnati Bell has been upgrading its network with next-generation fiber in order to support the growing demand for data and the broader rollout of 5G services. The company said it has "future-proofed" 50% of its network, representing more than 17,000 miles of dense metro and last-mile fiber and has plans to further upgrade its network over the next few years.
The ongoing fiber upgrade will enable the company to provide utility-like services for broadband and data, which it hopes will generate stable and growing cash flows.
With the advent of 5G, IoT and OTT video services, investors such as Brookfield are snapping up network, data center and fiber-based assets in order to cash in on the increased demand for bandwidth capacity. In the U.S., there are approximately eight networked devices per person, which is expected to climb to 13.6 by 2022 according to the Cisco Visual Networking Index 2018. The average fiber-connected household generated 86 gigabytes of data per month in 2017 and will generate 264 gigabytes per month by 2022, according to the Cisco VNI.
Earlier this year, AT&T announced that all of its customer contracts, employees supporting the colocation operations, fixed assets, leases and the related facilities were transferred over to Brookfield as part of a deal worth $1.1 billion. In July, Brookfield made a $3.66 billion investment in India's Reliance Industries' telecommunications tower assets.
On Dec. 20, Brookfield, which owns and operates a global network of infrastructure companies in utilities, transportation, energy and data infrastructure, also announced it had bought a 93% stake in UK-based network operator Wireless Infrastructure Group (WIG) from 3i Infrastructure for $504 million.