NM Telephone Coop Agrees to Sell Licenses Covering New Mexico RSA 6             

Whether it's been towers, spectrum, or other operating assets, the wireless market has experienced a strong uptick in deal activity of late, with the bigger players taking the lead as active buyers.  Verizon Wireless announced on February 17 that the company had acquired wireless operating assets from Clovis, NM-based ENMR Telephone Cooperative.  The acquisition, which is expected to close in the second half of 2012, includes cellular, AWS and PCS spectrum and approximately 20k wireless subscribers in the southeast quadrant of New Mexico. Financial terms of the transaction have not been disclosed.

The wireless assets acquired from ENMR serve a rural, 21.6k square foot section of New Mexico with a population of approximately 268k. Verizon will obtain the coop’s GSM operations, licenses and spectrum within New Mexico RSA 6, a market that includes the counties of Chaves, Eddy, Lea, Lincoln and Otero.

Despite dealing its operating assets in NM RSA 6, ENMR will continue to operate its wireless business in NM RSA 2, NM RSA 4 and TX RSA 3, covering the northeast quadrant of New Mexico and parts of western Texas. The coop, through its subsidiary Plateau Wireless, maintains approximately 55k wireless subs in New Mexico and Texas following the Verizon sale.

According to ENMR, the Verizon deal allows the company to focus resources on its remaining service areas—in which the company also offers Internet service and serves 12k access lines—while divesting properties that did not project to be profitable down the road. Tom Philips, ENMR ceo, spoke to this point following the deal's announcement.

“We will reinvest the proceeds from the sale into wired and wireless communications infrastructure that are in our service area, so this brings a direct benefit to cooperative members,” Phelps commented. “With increased competition and other factors, the profitability of that area for projects going forward was going to be significantly dampened anyway.”

The increased competition referenced by Phelps can be at least partially attributed to Verizon expanding its wireless operations in New Mexico. During 2011, the wireless giant invested $180m in the region to add network coverage and provide additional wireless capacity. Verizon also picked up 3 PCS licenses in Carlsbad and Roswell from Penasco Valley Telephone Cooperative back in April 2011, which serve portions of the same markets as the mobile wireless properties it acquired from ENMR.

All things considered, from a coverage perspective, the deal does little to expand Verizon’s footprint.  Pre-transaction, it already maintained at least 49 MHz of usable spectrum in each of the five counties in which it acquired wireless assets (Lincoln 74 MHz, Lea 64 MHz, Otero 59 MHz, Eddy 54 MHz, and Chaves 49 MHz). Given Verizon’s arsenal of spectrum in the rural region, ENMR’s prospects for wireless growth in the market were minimal, making the asset sale a logical move—a move that further reflects the difficultly of maintaining profitability in a rural and regional wireless network when competing with the larger, national wireless providers.