# T-Mobile sells wireline business to Cogent for $1, expects hefty charge
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-09-08
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: T-Mobile Doubles Down on 5G Services in $1 Deal with Cogent
Meta Description: T-Mobile focuses on 5G after $1 deal with Cogent for wireline business sale, includes $700 million transit services contract.
URL: https://financedigest.com/t-mobile-sells-wireline-business-to-cogent-for-1-expects-hefty-chargehtml

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By Yuvraj Malik

(Reuters) – T-Mobile US Inc is doubling down on 5G services after it struck a deal on Wednesday to sell its wireline business to Cogent Communications Holdings Inc for $1, while taking a $1 billion charge on the transaction.

The deal includes a $700 million contract under which Cogent will provide transit services to the carrier for 4-1/2 years after the deal closes.

T-Mobile has been [turning its attention away from the wireline business](https://www.financedigest.com/6-expert-tips-to-turn-your-photography-passion-into-a-business.html "6 Expert Tips to Turn Your Photography Passion into a Business") that includes assets from its $26 billion acquisition of Sprint Corp in 2020.

In the most recent earnings call, Chief Executive Michael Sievert said the company was no longer using Sprint infrastructure to [support its wireless business](https://www.financedigest.com/uks-sunak-to-halve-support-that-helps-businesses-pay-fuel-bills-the-times.html "UK’s Sunak to halve support that helps businesses pay fuel bills -The Times") and that an asset review was underway.

The wireline business houses communications systems, [data processing](https://www.financedigest.com/reckon-introduces-link-to-bank-data-to-help-small-businesses-streamline-the-reconciliation-process.html "Reckon introduces link to bank data to help small businesses streamline the reconciliation process ") equipment and fiber optic cable, and earned $739 million in revenue last year.

We think that T-Mobile must be receiving some sort of discount on the IP transit services that they will be buying from Cogent contractually, and they will save on the costs that they’d otherwise have to keep, maintain and improve (the infrastructure),” said Michael Ashley Schulman, partner and chief [investment officer at Running Point Capital Advisors](https://www.financedigest.com/5-tips-choosing-right-investment-advisor.html "5 tips for choosing the right investment advisor").

For Cogent, the [deal provides](https://www.financedigest.com/intellect-signs-multi-year-deal-with-one-of-the-big-four-in-australia-to-provide-a-digital-solution-for-business-and-retail-banking.html "Intellect signs multi-year deal with one of the “Big Four” in Australia to provide a digital solution for business and retail banking") a U.S. long-haul network that could eventually replace its current leased network and help expand the company’s product [set to consumers](https://www.financedigest.com/factbox-how-far-are-uk-energy-bills-set-to-rise-and-what-help-are-consumers-getting.html "Factbox-How far are UK energy bills set to rise and what help are consumers getting?") and enterprises.

Cogent [expects its revenue](https://www.financedigest.com/russias-gazprom-expects-increase-in-2022-revenue.html "Russia’s Gazprom expects increase in 2022 revenue") base to be about $1.1 billion, or 180% of its current $600 million run rate, CEO Dave Schaeffer said on a conference call.

The [deal is expected to close](https://www.financedigest.com/greece-britain-discussing-parthenon-sculptures-return-but-deal-not-close-athens-says.html "Greece, Britain discussing Parthenon Sculptures return but deal not close, Athens says") in the second half of 2023, and T-Mobile said it would book the pre-tax charge in the third quarter of 2022.

Morgan Stanley served as the [financial adviser](https://www.financedigest.com/smart365-to-unite-advisers-and-technology-for-better-financial-decisions.html "Smart365 to unite advisers and technology for better financial decisions") for Cogent, while Houlihan Lokey was T-Mobile’s financial adviser.

(Reporting by Yuvraj Malik in Bengaluru; Editing by Anil D’Silva and Milla Nissi)


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