Verizon Wireless to buy Cincinnati Bell’s AWS spectrum

Verizon Wireless will pay $210 million to acquire spectrum licenses and related assets from Cincinnati Bell. The nation’s largest wireless carrier will assign the licenses to Grain Management, a private equity firm that invests in wireless infrastructure. Verizon will then lease back most of these licenses from Grain Management. Cincinnati Bell will exit the wireless business and focus on its fiber business.

Cincinnati Bell Wireless (CBW) holds 1.7/2.1 GHz AWS spectrum, the most popular spectrum for U.S. LTE deployments to date. CBW says that in tests its 4G network had average download speeds of 10 Mbps and average upload speeds of 5 Mbps, while its 3G network’s download speeds average 2.3 Mbps and upload speeds average 0.7 Mbps.

CBW, which had 304,000 wireless subscribers at the end of 2013, said it has become increasingly difficult to invest in wireless infrastructure at the levels needed to compete with larger rivals. The company said its customers do not need to take any action at this time. The carrier will lease back its spectrum from Verizon for a nominal fee during the transition period. The sale is expected to close during the second half of this year. Cincinnati Bell Wireless (CBW) expects to continue to provide wireless service for 8-12 months from the time of signing.

Verizon is paying $194 million in cash for Cincinnati Bell Wireless’s spectrum licenses, and the remainder of the purchase price represents Verizon’s assumption of CBW’s tower leases. CBW says Verizon is paying 4.5 times its estimate for 2014 adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization.)

This deal is the latest in a series of moves by Verizon aimed at increasing its access to AWS spectrum. Late last year, the carrier proposed a spectrum swap with T-Mobile US. In addition, Verizon is buying 20 megahertz of AWS spectrum from a consortium of cable companies, and hopes to acquire even more in the government’s upcoming spectrum auction.

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