An agreement has been reached by Cogent and T-Mobile to acquire the wireline business of T-Mobile. The acquisition of T-Mobile’s wireline business operation by Cogent is anticipated to be a perfect strategic match for its current business. Financial terms of this acquisition were not disclosed.
The legacy Sprint U.S. long-haul network is available through the Wireline Business, giving Cogent the ability to expand its product offering, including the sale of optical wave transport services to both new and existing customers, as well as to complement and eventually replace its current leased network. Additionally, the firm has a present clientele that would be a good fit for Cogent’s goods and services as well as a team of seasoned workers who are equipped to carry out the company’s strategy.
In accordance with the deal, Cogent will also acquire some business-related liabilities in addition to the fiber network, related assets, and users.
Additionally, the parties will enter into a separate agreement at the time of the acquisition’s closing under which Cogent will provide IP transit services to T-Mobile for 54 months after the closing date in exchange for $700 million in payments from T-Mobile, with $350 million due in equal installments over the first 12 months following the closing and $350 million due in equal installments over the following 42 months.
Upgrade from MPLS VPN solutions
For their business requirements, Cogent anticipates providing customers with the option to upgrade from outdated MPLS VPN solutions to contemporary Ethernet / VPLS or SD-WAN / DIA solutions. Additionally, Cogent anticipates making it easier for users with netcentric Internet access to switch from T-Mobile Wireline Business (predecessor Sprint) AS1239 to Cogent’s AS174.
Cogent will complete the transaction through a newly established direct subsidiary. The purchase will not be financed by Cogent issuing any additional debt or equity, and the deal is not anticipated to dilute Cogent’s current investors. Cogent intends to keep paying the present dividend per share, which is anticipated to rise over time.
The transaction is subject to receipt of regulatory approvals and other customary closing conditions. It is expected to close in the second half of 2023.
Morgan Stanley & Co. LLC served as exclusive financial advisor for Cogent, and Latham & Watkins LLP acted as legal advisor. Houlihan Lokey served as the exclusive financial advisor to T-Mobile while T-Mobile was represented by Joseph Alexander, Nancy Victory, Marc Samuel and Jason Juall from DLA Piper.