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Verizon Buys Cincinnati Bell's Spectrum for $210M

Sarah Thomas
4/7/2014
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Verizon Wireless will acquire all of the wireless spectrum licenses currently held by Cincinnati Bell in a deal worth around $210 million that will see the regional operator exit the wireless business.

The carriers announced the transaction on Monday, noting that Cincinnati Bell Inc. (NYSE: CBB) will sell all its rights, titles, and interest in its wireless spectrum licenses for $194 million in cash, and Verizon Wireless will take over certain tower lease obligations.

The regional operator has been selling wireless service in Ohio, Indiana, and Kentucky for the past 16 years, but declining revenues and subscriber losses caused it to put the wireless segment under review last year. Once it divests its spectrum, it instead plans to focus on its Fioptics line of broadband and voice services.

Cincinnati Bell will continue to serve its 340,000 mobile customers for the eight to 12 months it takes to close the deal, and CEO Ted Torbeck said in a statement that those customers don't need to take action at this time. The carriers expect the deal to close in the second half of this year, after which Cincinnati Bell will lease back the sold spectrum as it winds down its wireless network operations.

Why this matters
Light Reading predicted that the smaller operators would become spectrum snacks for the big four last year, following AT&T Inc. (NYSE: T)'s acquisition of Leap Wireless, as deals like this are really the only way the major players can bolster their spectrum position in the US.

In addition, it is becoming increasingly hard for the smaller players to compete against the big four, so an acquisition with a pretty decent price tag is a good exit option for the likes of Cincinnati Bell. (See Smaller US Operators to Become Spectrum Snacks?)

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— Sarah Reedy, Senior Editor, Light Reading

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MikeP688
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MikeP688,
User Rank: Light Sabre
4/7/2014 | 6:27:34 PM
Re: Sprint's rural alternative
I couldn't agree more--and it will continue.  But, what is gratifying to see is some of the more "creative" players out there that would continue to partner w/the major players--the one that comes to my mind (and I have their hotspot is FreedomPop). 
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
4/7/2014 | 6:25:23 PM
Re: Sprint's rural alternative
Yeah I can understand that viewpoint, but I think it's about scale. Verizon is just acquiring spectrum, not a big swatch of customers. Cincinnati Bell is the 9th largest operator in the US, but it's still pretty small. And, it's customers don't have to move to Verizon, although i bet a lot of them will. May be an opportunitiy for its competitors to court those customers in Cincy Bell's regions.
MikeP688
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MikeP688,
User Rank: Light Sabre
4/7/2014 | 6:22:06 PM
Re: Sprint's rural alternative
This consolidation does not bode well for competition and choice.  That's the challenging part here--although it apperas that the FCC seems not to mind the extent of the consolidations and the decision it made to release additional spectrum.

 

 
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
4/7/2014 | 1:04:31 PM
Re: Sprint's rural alternative
From what I heard it's HSPA+ network was faster than a lot of LTE option in its regions, but it still didn't have a path beyond that. Sprint could've potentially give them that, but this was a cleaner way out to focus on its landline business instead.

It did have a loyal customer base, but only in parts of Ohio, Kentucky and Indiana, which is probably why you were unaware.
danielcawrey
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danielcawrey,
User Rank: Light Sabre
4/7/2014 | 1:01:45 PM
Re: Sprint's rural alternative
It probably had to do with competing with Verizon. If there is one thing that Verizon has done well it has been its coverages, especially in LTE.

The VZ network is so good and dominating it probably was a disincentive for Cincinnati Bell to try to compete. And I didn't even know Cincinnati Bell had wireless services. 
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
4/7/2014 | 11:24:21 AM
Sprint's rural alternative
It's interesting that Cincy Bell found it too expensive to invest in LTE, which is a big reason they sold to Verizon. But, just last week Sprint announced its deal with the CCA to help, even pay for, LTE deployments amongst its rural customer base. Cincy Bell is a CCA member. Why do you think they didn't consider this option?
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