Verizon Wireless buying spectrum and assets from Cincinnati Bell for $210 million

Cincinnati Bell Wireless has entered into an agreement to sell its spectrum holdings and wireless infrastructure to Verizon Wireless. The deal, valued at $210 million will see Cincinnati Bell's customers transferred to Verizon "or other wireless providers" over the next 8-12 months, during which time the carrier will lease back that spectrum and those towers for "a nominal fee".

With 340,000 subscribers, Cincinnati Bell is the 9th largest carrier overall in the United States, and the fourth largest regional carrier in the nation. After the wind-down of their cellular service, Cincinnati Bell will be left to focus on their FiOptics fiber internet and television service.

While Cincinnati Bell does have a loyal customer base in the Ohio-Kentucky-Indiana region around Cincinnati, they've struggled to compete against the national wireless behemoths. Citing the costs that if would take to upgrade their network, Cincinnati Bell opted to not upgrade their network to support LTE, instead focusing on improving their HSPA+ network, which has consistently offered better speeds in their coverage area than LTE from competitors, but struggled with roaming once users left the Cincinnati metro area.

Verizon has spent considerably recently in efforts to bolster their network. In addition to the purchase of Cincinnati Bell's wireless assets for $210 million, last year Verizon put down $130 billion to buy out Vodafone's 45% stake in Verizon Wireless and $3.6 billion to buy spectrum across the nation from cable providers Comcast, Time Warner, Cox, and Bright House.

Verizon runs a CDMA+LTE network, while Cincinnati Bell's network is purely GSM-based.

It's become increasingly difficult for regional carriers to compete effectively with the giants of AT&T, Sprint, T-Mobile, and Verizon. Does the capitulation of a regional power like Cincinnati Bell spell the coming end of regional carriers in the United States?

Press release:

Cincinnati Bell to Sell Wireless Spectrum Licenses

CINCINNATI--(BUSINESS WIRE)--Apr. 7, 2014-- 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.

Source: Cincinnati Bell

 
There are 36 comments

Red Ed says:

And let the bashing begin...

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Bashing? Oh you must mean the polite discussion about how Verizon is the worst thing ever to happen to mankind........ /s

Seriously, I don't like Verizon, but the OEM and carrier hating goes way to far here.

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Justin Stepp says:

Cincinnati bell is a million times worse than Verizon.
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Flyer00 says:

No doubt Cincinnati Bell sucks, but no where near as bad as Veri$on.

I see what you did there.

LG G2 on 4.4. Kit-Kat

Dizfunctions says:

Just what we need... Less competition

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luniboy26 says:

So buying spectrum from a carrier that can't afford to upgrade it while leasing it back to them for a smaller than upgrading fee is less competition? Wow terms are ever changing on these here internets.

Zig261 says:

Which is why Google can NEVER buy Verizon? They're just too big and powerful beyond their budget.

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On2Vegas says:

Agreed. People need to let go of that pipedream. Verizon has a $196 Billion market cap.

Flyer00 says:

What about Google buying T-Mobile or Sprint?

NoNexus says:

Nope, not the focus.

Really falls under why buy the cow when you can get the milk for free.

-------------------------------------------
You really should see the crap I don't post. Sorry if honesty offends you

Flyer00 says:

I think the issue is that the milk really is not free and they have no control over the cows. How long will the milk keep coming and what will the quality be? They obviously felt it was worth entering the ISP and TV provider business, which is a market in desperate need of competition, just like the wireless industry.

bigtank says:

Google has said many times that they are not trying to be a service provider. They are making a statement with Google Fiber. I applaud what they are doing. They are making a statement about broadband infrastructure in the US and putting their money where their mouth is

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Justin Stepp says:

Omg this the best news ever. This is not "there is less competition news", this is the worst company in Cincinnati may finally be going out of business. They screw their customers so bad on everything and they have such inconsistent services that they have a horrible reputation. I just switched to Verizon from them this year.

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condo says:

This is actually horrible for T-Mobile customers. The spectrum that Cincinnati Bell uses locally is what T-Mobile has been deploying LTE on across the country. They have been a major reason why LTE has been so late in the area with T-Mobile. I'm just disappointed that it isn't T-Mobile buying them out. And yes, Verizon is evil.

Justin Stepp says:

The only evil thing I see with Verizon is pricing. They have the best service and great customer service. You get what you pay for.

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Jay Holm says:

Verizon is overhyped & overrated! And yes I am speaking from first hand experience, I was with them from March 2010 to April 2013, I pay for LTE, not useless EVDO Rev!!! At least with T-Mobile their network is far, far faster than Verizon's is when LTE drops. I hate EVDO! Samsung Droid Charge by the way.

Verizon is no different than Apple, marketing, marketing, marketing, people get brainwashed by advertisements and hype.

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Justin Stepp says:

Well I've seen far superior performance in my area than any other carrier

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twolastnames says:

It's so weird I have the exact opposite attitude. T-Mobile sold me service without telling me they don't have local numbers in Omaha so they can't port my number to pay my etf. 2 months ago I sent the phones back, and today finally I'll be done screwing around with them.

Sent from my bathroom

Synycalwon says:

Samsung Droid Charge? There's your problem, not Verizon. That device wasn't known for the strongest radios (like the Galaxy Nexus) :)

wezi427 says:

Verizon covers areas outside major cities, T-Mobile can't compete there. I've never had a dropped call from Verizon, can you say that about T-Mobile?

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Great network....yes. Great customer service......I wouldn't go that far.

**Was it over when the Germans bombed Pearl Harbor? Hell no!**

Exactly! Verizon already has a strong LTE network in the Cincy area. Cincinnati is the largest city without T-Mobile LTE.

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Flyer00 says:

Cincinnati Bell is not going out of business, they are just exiting the wireless market to focus on their fiber optics Internet/TV/phone offerings.

Justin Stepp says:

They can't roll it out fast enough. Everyone I know is ditching their dsl.

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kevkavalier says:

CB needs to sell Fioptics to Verizon as well. Would be great to see a working fiber network that doesn't suck.

Flyer00 says:

No way, they are actually pretty affordable as an ISP. Veri$on's plans are way too expensive!

Cincinnati Bell are terrible, we just switched our company phones over to TMobile as they paid the ETF, poor customer service, poor coverage, and bullshitters for reps.

As for the H speeds.... In and around Dayton you got 3mb down max and 500k up, and dropped calls for fun.

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Justin Stepp says:

+100000000000

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Duffin says:

I would be extremely pissed if I were a Cincinnati Bell customer. I used to have, them, though, and there's a reason they don't have a ton of customers. Their service sucks. Still don't like that they are dumping it to Verizon. Why not T-Mobile?

Flyer00 says:

Guessing Veri$on paid more than T-Mobile could afford. It sucks, though, because T-Mobile needs LTE spectrum in the area, whereas Veri$on already has LTE deployed here.

eahinrichsen says:

Cincinnati Bell's wireless service was absolutely terrible when I lived there. My work cell was through them and I used my personal phone on AT&T because it was the only way I could reasonably expect to complete a 30-minute phone call.

That said, their fiber service was the best TV and ISP experience I have ever had. They were hilariously far ahead of Time Warner in terms of network speed, HD signal quality and price.

Also, anyone else having trouble posting from the AC app?

Tim Martin3 says:

^^ Only person I know on CB FiOptics that says their experience has been good or even acceptable. I've personally moved over 40 friends and families off CB because of choppy video and inconsistent speeds. All inside the 275 loop. CB has had a terrible implementation process of FiOptics and can not handle when more than 10 people in the area sign up. Terrible in every way shape or form especially if you have to call in for tech support. Cudos to you for having a good experience, but I've seen too many personally to believe that your experience is the norm.

eahinrichsen says:

I probably benefitted from being among the first customers to get their fiber service, actually. This was like five years ago, and I was outside of the 275 loop (Mason).

Coincidentally, I just landed at CVG for work.

Posted from one of an unnecessarily large collection of Nexus devices because I'm That Guy

jackwagon06 says:

Yes I cannot post from the app, or sign into the app now after signing out. AC please fix!

sacwoo says:

I hope verizon would purchase Bluegrass Cellular in KY, the strong hold Bluegrass has had on that spectrum over the last 15 years prevents porting numbers to verizon from that area. The time of regional carriers is over, IMO