Cingular Wireless L.L.C. signed a definitive agreement with Dobson Communications Corp. to exchange ownership of Cingular’s Northwest Michigan cellular property with Dobson’s Eastern Shore of Maryland cellular property. In addition to the property swap, Cingular said it will pay Dobson $23 million and transfer its 1-percent ownership interests in three cellular properties in Texas and Oklahoma to Dobson, which is the majority owner of the markets.
The exchange involves Cingular’s Michigan RSA 5 cellular license, which Dobson currently manages for Cingular and which covers 169,400 potential customers in Cadillac, Manistee and Ludington, for Dobson’s Maryland RSA 2 cellular license covering approximately 471,700 pops in Ocean City, Salisbury, Easton and Cambridge. Dobson is expected to lose approximately 17,000 subscribers following the swap. In addition, Cingular will transfer its minority ownership in Texas RSA 2 and Oklahoma RSAs 5 and 7 to Dobson.
“Maryland’s Eastern Shore is a key market for Cingular,” said Mark Feidler, chief operating officer for Cingular. “This will enhance our service for existing customers throughout the Maryland and [District of Columbia] markets, and make Cingular available to an entirely new set of potential customers.”
Feidler added that the deal would also reduce Cingular’s roaming costs.
Dobson noted the deal would solidify its holdings in Michigan and bolster its local service offerings.
“This transaction expands our Michigan footprint with an attractive market that is adjacent to Michigan RSA 3, which we already own, and it should enable us to enhance the profitability of our local service business,” said Everett Dobson, chairman, chief executive officer and president of Dobson, which also owns Michigan RSAs 1 and 10.
The carrier added that it does not expect the transaction, which is scheduled to close during the first quarter of next year, to have a material impact on its operating earnings or capital expenditure expectations for next year.
In connection with the transaction, both companies said they will assist one another in building out GSM/GPRS technology in the Maryland RSA 2 and Michigan RSA 5 markets to go along with plans by both carriers to overlay their legacy TDMA networks.
Dobson made similar market consolidation deals with AT&T Wireless Services Inc. late last year, foregoing its California properties for cellular markets in Alaska.
