T-Mobile strikes deal to unload legacy Sprint wireline biz to Cogent for $1

T-Mobile has moved forward with the anticipated unloading of its legacy wireline business, striking a deal to sell the asset to Cogent in a transaction valued at $1. However, T-Mobile will be on the hook to pay $700 million in transit services to Cogent for several years after the deal is closed.

The deal was announced nearly a month after T-Mobile confirmed it was no longer relying on Sprint’s legacy wireline network to carry its traffic, and was reviewing how it was going to manage that asset going forward. That, naturally, led to speculation that T-Mobile was preparing to sell it off.

The deal for the Sprint wireline assets, a unit formerly known as Sprint Global Markets Group, provides a range of services, including MPLS (Cogent plans to convert those to VPLS and WAN), DIA (dedicated Internet access) and transit, wavelength and colocation services. The unit generated roughly $560 million in revenues in 2021 and has about 1,300 employees. In North America, the unit operates approximately 19,000 long-haul route miles, 1,300 metro route miles, and some 16,800 route miles of leased dark fiber.

Cogent is paying $1 as the purchase price (with minimal debt assumed, and no equity issued). Under the commercial piece of the agreement, T-Mobile will outlay payments for 54 months totaling $700 million for transit services (all on-net from Cogent). Meanwhile, T-Mobile expects to recognize a $1 billion pre-tax charge in the third quarter of 2022.

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