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As its focus shifts, Alaska Communications will sell wireless business to GCI

  • Author: Megan Edge
  • Updated: September 28, 2016
  • Published December 4, 2014

Alaska Communications System Group Inc.is selling its wireless subscriber base and its interest in Alaska Wireless Network LLC to General Communication Inc. for $300 million, according to a joint press release sent Thursday by the companies.

The 109,000 wireless customers using ACS should expect a "seamless" transition between the two companies and continued statewide coverage, they wrote.

"We have service-level agreements that should make this as smooth as possible," said David Morris, GCI's vice president of corporate communications. "ACS does have a specific billing system, so we will need to create a similar billing system and integrate that in our back office and train the employees, but ACS will be helping us every step of the way."

Soon-to-be GCI customers will be notified of any further changes and said "customers do not need to take any action at this time," according to the release.

GCI's purchase of ACS' 33 percent interest in Alaska Wireless Network also means GCI will own 100 percent of the network. AWN was created in July 2013 as a ACS and GCI joint venture in an effort to "better compete against national wireless carriers" such as Verizon, which entered the Alaska market this year.

Morris said the purchase has been in the works since summer and "made sense" to both companies.

"Things (at AWN) were negotiated," said Morris."It wasn't just network issues; there was accounting, keeping track of things, making sure things were fair to both parties, and it just reduced a lot of needless work."

The sale will affect 150 to 200 ACS employees, Heather Cavanaugh, the company's director of corporate communications, said. Those employees will be offered separation packages "now," voluntary separation packages later, or possibly a new position. She said employees were notified Thursday.

On the flip side, Morris said GCI has opened 150 new positions within the company.

"There is no way we could handle the influx of customers without additional jobs," Morris said. But he said about half of those have already been filled, as training can take up to a year.

Cavanaugh said ACS has been working to build its business and residential broadband Internet services, as well as its information technology service, which she described as "unique."

"As many of us know, there (haven't) ever been more options for wireless service," Cavanaugh said. "We have an incredible opportunity to grow and provide these services to Alaska. And we have grown that end (broadband and IT services) every quarter for almost three years."

Cavanaugh added that wireless customers are only one-third of the company's business.

The sale will not affect ACS' home Internet, business broadband or IT services. Contracts being sold to GCI will not be changing either, she said.

In an email sent to employees Thursday, ACS president and CEO Anand Vadapalli acknowledged that the news "may come as a surprise" and provided information about a series of informational meetings scheduled to address employee questions.

"With this deal, we will create one of the most financially secure companies in our sector," Vadapalli wrote. "We will receive $300 million from GCI and use $250 million of that to pay down debt. Using the $250 million to pay down our debt is the best use of the money, since with this action we finally get to a level of 'mortgage' that our business can sustain.

"This change will boost our future growth and provide customers with the highest quality broadband services in Alaska."

The sale is expected to be finalized during the first quarter of 2015. Vadapalli wrote in the email to employees that transitioning wireless operations may take 60 to 90 days or longer after the transaction closes, after which the company will begin "winding down" its wireless service.

"We are choosing to focus on the areas where we can uniquely serve Alaska," Vadapalli wrote.

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