The companies will design and operate a statewide wireless network to provide next-generation wireless service plans for GCI and Alaska Communications wireless customers. Each will continue to market and sell these plans independently to their respective retail customers.
GCI and Alaska Communications each will contribute to AWN their respective wireless assets, including spectrum licenses, cell sites and backhaul facilities, switching systems, and certain other assets necessary to operate a statewide wireless network. As part of the transaction, GCI will buy $100 million of wireless assets from Alaska Communications and contribute them to AWN.
Alaska Communications will own one-third and GCI will own two-thirds of the new company. During the first four years of operations, Alaska Communications will be eligible to receive preferential cash distributions totaling $190 million. GCI will receive all remaining available cash distributions over the same period. Following the initial four-year period, GCI and Alaska Communications will receive distributions proportional to their ownership interests in AWN.
AWN will be managed by GCI. Wilson Hughes, GCI's current chief operating officer, has agreed to serve as AWN's first president and chief executive officer. The transaction needs regulatory approval and is expected to close sometime in Q2 2013.
"The wireless business is capital-intensive, requires scale to compete successfully against national carriers, and demands more spectrum than either company individually owns," said Alaska Communications president and CEO, Anand Vadapalli, and GCI president and CEO, Ron Duncan. "By combining our respective wireless assets, GCI and Alaska Communications can provide a state-of-the-art Alaska wireless network owned and operated by Alaskans for Alaskans. We believe that The Alaska Wireless Network will provide the fastest, most geographically extensive, and most reasonably priced wireless services for Alaska subscribers, allowing us each to compete more effectively in the retail market."
From the start, AWN will cover more than 95 percent of Alaska's population. Initially, it will serve the more than 250,000 GCI and Alaska Communications urban and rural subscribers and lifeline subscribers.