T-Mobile US agreed to sell fixed assets acquired as part of its merger with Sprint to Cogent Communications for the nominal sum of $1, in addition to taking a $1 billion hit on the transaction.
In an unusual deal, a Securities and Exchange (SEC) filing showed Cogent Communications will pay $1 to take control of Sprint’s former fibre long haul network and related assets.
T-Mobile will then pay Cogent $700 million over 54 months for IP transit services, with an initial $350 million due in the first year after the deal closes.
In total, T-Mobile said it will recognise a pre-tax charge of $1 billion in the current quarter.
Cogent Communications stated it expects the acquisition to be an “ideal strategic fit” for its existing business, with the network assets complementing and eventually intended to replace its current leased network. It also provides the company with the ability to expand its product set, including sales of optical wave transport services.
For T-Mobile, a sale was perhaps in the cards after CEO Mike Sievert noted on a recent earnings call it was no longer using Sprint infrastructure for its fixed line operations and had begun an asset review.
Cogent Communications added T-Mobile was putting its strategic focus on providing wireless services to consumers and enterprises, which was at the core of its future growth.Subscribe to our daily newsletter Back