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AT&T Buys Convergys' 'Cellular Partnerships' for $320 Million

By Rajani Baburajan
TMCnet Contributor

Convergys (News - Alert) Corporation, a provider of relationship management software, announced it will sell holdings in the “cellular partnerships” located in the Cincinnati metropolitan area to AT&T.

The deal is worth approximately $320 million in cash.

Convergys spun off from Cincinnati Bell (News - Alert) in 1998. Following this, the company received a 34 percent limited partnership interest in Cincinnati SMSA and a 45 percent limited partnership interest in Cincinnati SMSA Tower Holdings. These two properties are referred to as “cellular partnerships.”

Cincinnati SMSA is the wireless communications provider in central and southwestern Ohio and northern Kentucky. Cincinnati SMSA Tower Holdings is a cellular tower holding company for Cincinnati SMSA.

“The sale of this non-core asset further simplifies our business, strengthens our balance sheet, and gives our investors a clear view to the operating performance of our businesses,” said Jeff Fox, president and CEO of Convergys, in a statement.

Since AT&T (News - Alert) is merely acquiring the remaining minority interest in partnerships it already controls, regulatory approvals are not required, company officials said. The deal is expected to close in early July, 2011.

Convergys expects the sale to generate net after-tax proceeds of approximately $250 million. The company will update full-year guidance to reflect cellular partnership-related impacts on EBITDA, EPS, and free cash flow after the sale closes. AT&T, a general partner, hopes that any impact on its earnings and cash flows from the purchase of Convergys’ minority stake in these operations will be insignificant.

AT&T manages the cellular partnerships’ business on a day-to-day basis. Convergys does not take part in this management.

“Financially and operationally, it makes sense for AT&T to purchase Convergys’ minority stake in our Cincinnati wireless operations,” said Larry Evans, vice president and general manager of AT&T Ohio and Western Pennsylvania. “We remain committed to providing a great experience to all our wireless customers in the Cincinnati area and throughout Ohio and Kentucky.”

Recently Convergys announced the availability of Convergys CRM. The solution, which is powered by Microsoft (News - Alert) Dynamics CRM 2011, will enhance the delivery of proactive customer-centric service and marketing communication by utility service providers.

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