Comcast Sells Cellular Unit

Comcast said Wednesday it's selling its cellular unit to SBC Communications for $1.7 billion, including $1.3 billion in debt.

Comcast (CMCSA), a cable TV operator and owner of the QVC shopping network, said its annual interest payments will drop about 20 percent after the deal closes.

SBC Communications (SBC), based in San Antonio, Texas, said the deal will help it expand existing wireless units by adding Comcast Metrophone in Pennsylvania, and Comcast Cellular One in Delaware and New Jersey - all of which cover an area with a population of 8.4 million.

Comcast gained 1 1/2 to 67 5/8 on Wednesday morning. SBC gained 1/4 to 59 1/4.

SBC plans to weave Comcast's areas with its wireless service areas in Washington, Connecticut, Rhode Island, Massachusetts and New York under the brand name Cellular One and SNET Wireless in Connecticut.

SBC will also purchase Comcast's wireless systems in Aurora-Elgin and Joliet, Illinois, as well as 12 PCS licenses in Pennsylvania acquired by Comcast in 1997.

"The agreement improves SBC's ability to compete and to offer customers one company for wireless value, quality and coverage throughout the Northeast," SBC CEO Edward E. Whitacre, Jr. said in a press release.

Comcast President Brian L. Roberts said the deal will help the company's balance sheet.

Comcast's leverage ratio will decline to 3.4 from 3.8 under the deal.

"This transaction makes strategic sense for both Comcast and SBC," Roberts said in a press release. "We will now focus on our core cable and content businesses as we move forward with the launch of new products and initiatives."

Written By Steve Gelsi