XO Communications will sell its national wireline telecommunications business for $700 million in cash and use the proceeds to become a leading provider of fixed broadband wireless services to businesses and service providers.
The company said it has entertained several bids over the past few months for its wireline assets and that the winning bidder was Elk Associates LLC, an entity owned by XO’s controlling stockholder, Carl Icahn.
XO currently is one of the largest holders of fixed wireless licenses in the 28 GHz-31 GHz spectrum range covering more than 70 U.S. major metropolitan markets.
Once the sale is completed, the wireless business will be debt-free and is currently expected to have in excess of $300 million in cash to fund its operations and for other corporate purposes. The company’s wireless services have already been made available to businesses and wireless service providers in select markets and, using its cash position and new strong balance sheet, the company plans to launch its services on a wider basis in the near future. The transaction is anticipated to close in late 2005 or early 2006.
The “XO Communications” brand name will be transferred to the private company and thereby will remain with the national wireline telecommunications business. XO anticipates operating its fixed wireless business under a new name.
It is anticipated that the wireless and wireline companies will enter into commercial agreements to sell each other’s products and services at competitive rates in order to take advantage of market opportunities.
“The action we take today will create a pure-play fixed broadband wireless provider that combines significant resources with in-depth industry expertise to meet the growing demand for high-bandwidth broadband wireless services,” said XO CEO Carl Grivner. “The market opportunity to provide these services has emerged, and our new focus on fixed wireless communications will enable us to offer robust fixed wireless solutions to businesses, mobile phone companies, and wireline telecommunications companies.”http://www.xo.com/
