RESTON, Va.-XO Communications Inc. is going completely wireless. The company announced plans to sell its nationwide wireline telecommunications business for $700 million in cash to Elk Associates L.L.C., but will retain its fixed broadband wireless spectrum in the 28 GHz and 31 GHz bands covering more than 70 metropolitan markets.
Elk Associates, which is owned by XO’s controlling stockholder Carl Icahn, was the winning bidder in a process set up by XO’s board of directors. XO did note that it remains open to superior proposals from third parties, and that if another bid is accepted XO will pay Elk Associates a 1-percent breakup fee.
Regardless of the eventual owner, XO said the company’s brand name will remain with the wireline operations and that it expects the transaction to close by early next year.
XO noted it will use the proceeds from the wireline sale to repay outstanding long-term debt, redeem outstanding preferred stock and fund the growth and development of its wireless business. The company said its wireless business will be debt free and will have more than $300 million in cash to fund operations.
XO added that it is already selling wireless to businesses and wireless service providers in select markets, and that it plans to expand coverage in the near future.
“The actions we take today will create a pure-play fixed broadband wireless provider that combines significant resources with in-depth expertise to meet the growing demand for high-bandwidth broadband wireless services,” explained XO Chief Executive Officer Carl Grivner. “The market opportunity to provide these services has emerged, and our new focus on fixed wireless communications will enable us to offer robust fixed wireless solutions to business, mobile-phone companies and wireline telecommunications companies.”
