Cincinnati Bell (NYSE:CBB), a leader in telecommunications and broadband
networking services, today announced that it has entered into agreements
to sell its wireless spectrum licenses and certain related assets to
Verizon Wireless for cash and an assumption of certain Cincinnati Bell
liabilities with a total value to Cincinnati Bell of approximately $210
million.
“We appreciate the loyal support from our Cincinnati Bell Wireless
customers over the last sixteen years, and we remain committed to
providing them with wireless service and support throughout the
transition period,” said Ted Torbeck, President and CEO of Cincinnati
Bell, adding that it is not necessary for customers to take any action
at this time.
Cincinnati Bell Wireless (“CBW”) will, for a nominal charge, lease back
the spectrum it is selling for a period of time following the closing of
the purchase transaction, during which it will wind down its wireless
network operations and assist its wireless customers in transitioning
their service arrangements to Verizon Wireless or other wireless
providers. CBW will notify its customers with further details regarding
this transition assistance around the time of the closing, which is
expected to be in the second half of 2014.
Transaction Detail
CBW has agreed to sell to Verizon Wireless all of its right, title and
interest in its wireless spectrum licenses for cash consideration of
$194 million. In addition, Verizon Wireless will assume certain tower
lease obligations. CBW expects to continue to provide wireless service
for 8-12 months from the time of signing. The cash flows from these
ongoing operations are expected to largely offset the anticipated
one-time fees associated with winding down the business. The total value
of the deal is estimated to be 4.5 and 6.0 times 2014 and 2015 CBW
Adjusted EBITDA consensus wireless estimates respectively.
Concurrently, Verizon Wireless has entered into a separate agreement to
assign its rights to acquire the spectrum licenses being sold by
Cincinnati Bell to Grain Management, LLC, a private equity firm that
invests in the media and telecommunications sectors. Verizon Wireless
will then lease certain of the spectrum licenses from Grain Management.
The Cincinnati Bell tower lease arrangements to be assumed by Verizon
Wireless are not included in its agreement with Grain Management.
Cincinnati Bell anticipates that, as a result of the transaction, it
will absorb certain overhead and shared service costs currently
attributable to its wireless operations. Cincinnati Bell is currently in
the process of developing strategies to minimize these costs and will
provide additional detail prior to or shortly after the transaction
closes.
“This transaction is an important step toward increasing focus on our
growing strategic product base,” commented Torbeck. “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.
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.”
The purchase transaction is subject to customary closing conditions,
including regulatory approval by the Federal Communications Commission.
Stephens Inc. is acting as sole financial advisor to Cincinnati Bell.
Cravath, Swaine & Moore LLP is acting as legal counsel, and Bingham
McCutchen LLP is acting as regulatory counsel to Cincinnati Bell in this
transaction.
Cautionary Statement Concerning Forward-Looking Statements
This release contains forward-looking statements regarding future events
and results that are subject to the “safe harbor” provisions of the
Private Securities Litigation Reform Act of 1995. All statements, other
than statements of historical facts, are statements that could be deemed
forward-looking statements. These statements are based on current
expectations, estimates, forecasts, and projections about the industries
in which we operate and the beliefs and assumptions of our management.
Words such as “expects,” “anticipates,” “predicts,” “projects,”
“intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,”
“endeavors,” “strives,” “may,” or variations of such words and similar
expressions are intended to identify such forward-looking statements. In
addition, any statements that refer to projections of future financial
performance, anticipated growth and trends in businesses, and other
characterizations of future events or circumstances are forward-looking
statements. Readers are cautioned these forward-looking statements are
based on current expectations and assumptions that are subject to risks
and uncertainties, including, but not limited to: the failure to obtain
the required regulatory approvals for the sale of wireless spectrum
licenses; the occurrence of any event, change, or other circumstance
that could give rise to the termination, cross-termination or
modification of any of the transaction documents; the disruption of
Cincinnati Bell’s plans and operations as a result of the transactions;
disruption to Cincinnati Bell’s business resulting from potential
vendor, payor and customer reactions to the transactions; the inability
to achieve anticipated financial results; and unexpected costs, fees,
expenses and charges incurred by Cincinnati Bell related to the
transactions, any of which could cause actual results to differ
materially and adversely from those reflected in the forward-looking
statements. Other factors that could cause or contribute to such
differences include, but are not limited to, those discussed in this
release and those discussed in documents Cincinnati Bell filed with the
Securities and Exchange Commission (SEC). More information on potential
risks and uncertainties is available in our recent filings with the SEC,
including Cincinnati Bell’s Form 10-K report, Form 10-Q reports and Form
8-K reports. Actual results may differ materially and adversely from
those expressed in any forward-looking statements. Cincinnati Bell
undertakes no obligation to revise or update any forward-looking
statements for any reason. The forward-looking statements included in
this release represent Cincinnati Bell estimates as of the date hereof.
Cincinnati Bell anticipates that subsequent events and developments will
cause its estimates to change.
About Cincinnati Bell
With headquarters in Cincinnati, Ohio, Cincinnati Bell Inc. (NYSE:CBB)
provides integrated communications solutions including local and long
distance voice, data, high-speed Internet, entertainment, and wireless
services that keep residential and business customers in Greater
Cincinnati and Dayton connected with each other and with the world. In
addition, enterprise customers across the United States rely on CBTS, a
wholly-owned subsidiary, for efficient, scalable office communications
systems and end-to-end IT solutions. Cincinnati Bell is the majority
owner of CyrusOne (NASDAQ: CONE), which provides best-in-class data
center colocation services to enterprise customers through its
facilities with fully redundant power and cooling solutions that are
currently located in the Midwest, Texas, Arizona, London, and Singapore.
For more information, please visit www.cincinnatibell.com.
About Verizon Wireless
Verizon Wireless operates the nation’s largest and most reliable 4G LTE
and 3G networks. As the largest wireless company in the U.S., Verizon
Wireless serves 102.8 million retail customers, including 96.8 million
retail postpaid customers. Verizon Wireless is wholly owned by Verizon
Communications Inc. (NYSE, Nasdaq: VZ). For more information, visit www.verizonwireless.com.
For the latest news and updates about Verizon Wireless, visit our News
Center at http://news.verizonwireless.com
or follow us on Twitter at http://twitter.com/VZWNews.
Editor’s Note: The “spectrum” is another term for the radio waves that
transmit voice and data through the air to your wireless phone. All
wireless communication signals must travel over spectrum, much the way
radio, television, and GPS devices use spectrum to transmit data. All of
this type of spectrum is regulated by the US government.
Copyright Business Wire 2014