Broadband provider Consolidated Communications has worked out a deal with Verizon to buy Consolidated’s share of five wireless limited partnerships, for an aggregate sum of $490 million.
The sale of the partnerships to Verizon is expected to close by the end of this year, though Consolidated noted that there are “third-party purchase rights available to other partners in the partnership” that could impact the timing of the closing. Proceeds from the sale will support Consolidated’s strategy to expand its fiber network and “pivot to a pure-play fiber company,” according to a company release.
According to a presentation for investors, the five partnerships through Consolidated subsidiary Clio include Pittsburgh SMSA Limited Partnership, expected to close immediately; two entities referred to as GTE Mobilnet of South Texas Limited Partnership, and Pennsylvania RSA No. 6(I) and Pennsylvania RSA No. 6 (II). Sales of the latter partnerships are expected to close by the end of 2022. The entities did business as Verizon Wireless in their respective states.
Consolidated noted that it has divested itself of around $600 million in non-core assets in the past year (most of which is accounted for in the Verizon transaction), as it has shifted its focus to expanding its fiber network. The Illinois-based company has a network that spans 50,000 fiber route miles, and it provides a variety of residential and business telecom services, including symmetrical broadband speeds up to 2 Gbps and Wi-Fi 6 for the home.
In Consolidated’s recent second quarter results, the company “added a record 9,600 net fiber subscribers, a three-fold increase from a year ago, and achieved total consumer net positive broadband connections for the first time in over seven years,” said Bob Udell, president and CEO at Consolidated Communications, in a statement on the results. He said that the sale agreement with Verizon “will provide additional liquidity to fund our fiber expansion plan and bring [fiber to the premise] to 70% of our addressable market by 2025.”
Consolidated adjusted its 2022 guidance on adjusted earnings due in part to the timing of the cash distributions from the sale of those wireless investments.