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?)
- US Spectrum Outlook: Smooth Not Crunchy?
- Verizon's 4G Strength Keeps It Above the Fray
- T-Mobile Spends $2.4B on Verizon Spectrum
- Verizon Fears 4G Spectrum Shortfall
— Sarah Reedy, Senior Editor, Light Reading