Following an announcement last month with Triton PCS Holdings Inc., Cingular Wireless L.L.C. cleared another hurdle to its pending $41 billion acquisition of AT&T Wireless Services Inc. by announcing an agreement with AWS affiliate Cincinnati Bell Inc. that alters their former non-compete clause and will allow Cingular to continue to offer wireless services where Cincinnati Bell currently provides service.
In addition to allowing Cingular to continue to offer services in southwestern Ohio, northern Kentucky and southern Indiana, the agreement provides Cincinnati Bell with the right to purchase AWS’ current 19.9-percent interest in Cincinnati Bell Wireless business from Cingular for $83 million beginning Sept. 30, 2005, as well as a five-year roaming agreement on both Cingular’s TDMA and GSM networks at reduced roaming rates.
“This deal allows Cingular to continue to offer consumers throughout Cincinnati, Dayton and the immediate area the unique benefits Cingular has to offer,” said Ralph de la Vega, chief operating officer for Cingular. “In addition, it further reduces roaming costs for the combined Cingular and AT&T Wireless customers.”
Cincinnati Bell added the agreement was expected to reduce the company’s roaming costs and offset the possible loss of roaming revenue so as to be “substantially neutral to recurring operating income. The company noted that it reported $3 million in roaming revenues during the second quarter of this year and $8 million in roaming expenses.
“This agreement insures that we will continue to offer outstanding nationwide wireless service at attractive prices for our customers in Cincinnati and Dayton,” said Jack Cassidy, president and chief executive officer of Cincinnati Bell. “The right to purchase the remaining interest in our wireless business will allow Cincinnati Bell to continue to offer high-quality, bundled service to our customers and further solidifies the profitability of the company.”
Cincinnati Bell said it had recently finalized an amendment to its credit facility that specifically allows the company to purchase the 19.9-percent interest in its wireless business and to finance the purchase with the available capacity in the revolving credit portion of its credit facility.
Cingular’s deal with Cincinnati is similar to a previous agreement with Triton PCS signed last month in that it would become effective only following the closing of Cingular’s acquisition of AWS, which Cingular said it expects to happen before the end of this year.
