WOW! (NYSE:WOW) has entered into a definitive agreement to sell a portion of its fiber network in the company's Chicago market to a subsidiary of Verizon (NYSE:VZ) for $225 million in cash.
In addition, WOW! and Verizon will enter into a new agreement under which WOW! will complete the build-out of the network in exchange for approximately $50 million (which approximates WOW!'s remaining estimate to complete the network build-out), payable as the remaining network elements are completed. The final build-out of the network is expected to be completed during the second half of 2018 and, when completed, will provide back-haul services to more than 500 macro-cell wireless sites and more than 500 small-cell wireless sites. WOW!'s Chicago fiber network is designed to support multi-use services and already connects Verizon Wireless macro towers and small cells, and the deal is expected to reduce Verizon's leasing costs.
"We're pleased to have reached an agreement to sell our Chicago fiber asset to Verizon," said Steven Cochran, chief executive officer of WOW!. "This transaction is consistent with WOW!'s stated objective of reaching an optimal leverage profile and allows us to continue to focus on areas of growth for residential and commercial services with our Internet centric-outlook and emphasis on expanding our markets through edge-out builds."
The transaction is subject to regulatory approvals and other customary closing conditions, and is expected to close by early in the first quarter of 2018. A portion of the proceeds are expected to be used to pay-down WOW!'s existing debt balances.
"Following our recent agreements with Corning, Prysmian and Straight Path, today's announcement is another example of Verizon's commitment to invest in multi-use fiber to provide customers with next-generation broadband services, such as smart cities and 5G," said Hans Vestberg, Verizon president of Network and Technology. "This acquisition will also help us create comprehensive digital solutions for small- and medium-business and enterprise customers."
WOW!'s fiber network in Chicago includes, among other areas, a number of lit buildings in the downtown central business district, including the Willis Tower (formerly the Sears Tower).