T-Mobile (NASDAQ: TMUS) has sold its wireline business to Cogent Communications Holdings, Inc. for one dollar, as it focuses on its core business of consumers and enterprise wireless. Cogent will receive 20,000 route miles of fiber and 1,400 enterprise customers in the deal. T-Mobile said it expected to record a pre-tax charge of about $1 billion in the third quarter of 2022, according to Reuters.
In addition to the fiber transport network and related assets and customers, Cogent will acquire certain liabilities associated with the business, as part of the agreement. The companies will also enter into a separate agreement where Cogent will sell IP transit services to T-Mobile at a discount for 54 months.
“While effectively getting paid by T-Mobile to take these assets off their hands may seem like a great trade-off for Cogent, the devil is always in the details,” wrote Eric Luebchow, Wells Fargo Analyst. More needs to be known about the revenue composition of the wireline assets and the accounting of the T-Mobile payments, he added.
Cogent noted that the business, which has run rate revenues of $560 million, has been declining at 10 percent every year, and it expects it to be in the $450 million revenue range post-closing, Wells Fargo reported.
“The acquisition of T-Mobile’s Wireline Business is expected to be an ideal strategic fit with [Cogent’s] existing business,” Cogent said in a statement. “The Wireline Business offers the legacy Sprint U.S. long-haul network that provides an owned network asset to complement and eventually replace Cogent’s current leased network and provides the ability to expand its product set, including the sales of optical wave transport services to new and existing customers.”
Of the big three wireless MNOs, T-Mobile has always taken the least interest in investing in fiber connectivity. In fact, the fiber transport business that it sold to Cogent was part of the deal when it merged with Sprint.
AT&T, on the other hand, has taken the most, heavily investing in fiber to the home. The MNO added 300,000 fiber network users in the second quarter of this year, which is its 10th straight quarter with more than 200,000 fiber network adds. Over the last eight quarters, AT&T has added nearly 2.3 million fiber network users.
In fact, Corning Incorporated (NYSE: GLW) announced last week that it’s expanding manufacturing capacity for optical cable, based on demand from AT&T, in Gilbert, AZ.
By J. Sharpe Smith, Inside Towers Technology Editor
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