TE Connectivity has decided to sell its subsea communications business (SubCom) to Cerberus Capital Management, for $325 million in cash.
The transaction is expected to close by the end of the first quarter of TE’s fiscal year 2019, TE Connectivity said recently.
Eatontown, New Jersey- headquartered SubCom business is expected to generate $700 million sales in fiscal year 2018, with a minimal profit.
TE Connectivity, which has an annual revenue of $13 billion from connectivity business, will use proceeds from the sale to fund share repurchases.
“It strengthens our business model; resulting in a stronger growth profile, reduced cyclicality, higher margins and a greater return on investment,” said TE Connectivity CEO Terrence Curtin.
SubCom has completed more than 100 cable systems and deployed over 610,000 kilometers of cable through its eight cable ships. SubCom has 1,400 employees and a strong customer base of internet content providers and telecommunications companies.
SubCom wins new deal from MainOne
Meanwhile, SubCom has won a contract from MainOne, a global connectivity and data center solutions provider, to extend its submarine cable system into West Africa’s francophone region.
Its additional branches connecting Senegal (Dakar) and Cote D’Ivoire (Abidjan) will connect to MainOne’s 7,000km cable system, which extends from Portugal to Nigeria, and will inject new technology that upgrades the system to a potential capacity of 10TBps by November 2019 when the subsea system becomes operational.
MainOne will have landing points in five markets – Nigeria, Ghana, Senegal, Cote D’Ivoire and Portugal, in addition to Cameroon.
A cluster of francophone countries in West Africa that are experiencing an increased demand for advanced telecom services including Burkina Faso, Mali, and Mauritania will also benefit from these extensions into Cote D’Ivoire and Senegal.