CommScope's $2.1 Billion Sale of Outdoor Wireless Networks Unit Buys Time, Hurts Profitability
The deal with Amphenol Corp. will enable the indebted tech vendor to pay its bills through next year, but it comes at the cost of one of its most profitable businesses
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Indebted tech vendor CommScope has announced the sale of its Outdoor Wireless Networks (OWN) and Distributed Antenna Systems (DAS) segments to Amphenol Corp. for $2.1 billion.
Also read: CommScope Reports 38% Q4 Revenue Drop … But No Buyers To Ease Its Arduous $9 Billion Debt Load
Managing a debt load of $9 billion, much of it tied to the $7.4 billion purchase of Arris in 2019, CommScope will be able to avoid liquidation through 2025, Raymond James analyst Simon Leopold told investors.
But it comes with a cost.
“The cash infusion enables CommScope to meet its debt obligations through 2025,” Leopold wrote. “However, it is divesting some of its most profitable businesses and will no longer have the cash generation from the OWN and DAS assets."
In early October, CommScope sold its “Home Networks” unit, which makes “customer premises equipment” like video set-tops and gateways, to Vantiva, the French company formerly known as Technicolor.
Also read: CommScope Tries To Race Past Bankruptcy Court
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The company’s latest divestment is expected to close in the first half of 2025.
“This transaction allows CommScope to increase focus and further strengthen its CommScope NEXT priorities with its remaining segments and business units,” CommScope CEO Chuck Treadway, said in a statement. “We believe CommScope’s OWN and DAS businesses are positioned to continue to perform well under Amphenol’s leadership.”
While CommScope seeks to raise capital through divestments, it has put money recently into its Access Networks Solutions business, outbidding Vecima Networks in May to acquire bankrupt Casa Systems’ cable tech operations for $45.1 million.
Daniel Frankel is the managing editor of Next TV, an internet publishing vertical focused on the business of video streaming. A Los Angeles-based writer and editor who has covered the media and technology industries for more than two decades, Daniel has worked on staff for publications including E! Online, Electronic Media, Mediaweek, Variety, paidContent and GigaOm. You can start living a healthier life with greater wealth and prosperity by following Daniel on Twitter today!