AT&T to buy stake in Convergys for $320 million

AT&T is set to buy stakes in two wireless operations from Convergys for approximately $320 million in cash.

The two holdings consist of a 34% stake in wireless operator Cincinnati SMSA and a 45% limited partnership interest in cellular tower company Cincinnati SMSA Tower Holdings in Ohio, US.

Convergys has predicted the sale to make approximately $250 million net after tax. AT&T has said that it doesn’t expect the acquisition to have any significant effect on its earnings and cash flow.

Larry Evans, VP and GM of AT&T Ohio and western Pennsylvania said: “Financially and operationally, it makes sense for AT&T to purchase Convergys’ minority stake in our Cincinnati wireless operations.”

AT&T will purchase minority stakes in partnerships that it already controls bypassing the need for regulatory approvals. Convergys received the stakes after they were released from Cincinnati Bell in 1998.

“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," added Jeff Fox, president and CEO of Convergys.

Both companies expect the sale to be completed by early July 2011.

"These stakes were something that Cincinnati Bell and Convergys weren’t leveraging as well as they could and AT&T just needs as much bandwidth as possible," said Judy Reed Smith, CEO of Atlantic ACM. "AT&T tells us that the difference between the data usage of an average customer before the iPhone to now is 8000% so AT&T need everything they can to beef up their network."

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