Comtech’s office in Chandler, Arizona. Photo: Comtech

Comtech‘s Board of Directors and management team announced late Thursday its intention to divest its Terrestrial & Wireless Networks (T&W) business, which provides “NG911” 911 emergency call solutions for state and local governments, and align its remaining businesses to form a “pure-play satellite and space communications company.”

The Board said that it has no timeframe for the completion of Comtech’s transformation. The strategy had been in the works for months. After retaining independent financial advisors to assist in a strategic review of the company, Comtech believes the creation of a pure-play satellite and space communications company with a simplified capital structure is in the best interests of its shareholders.

Comtech’s T&W business is a separate business segment from the Satellite & Space Communications (S&S) segment.

“In connection with the Board’s transformative strategy, the Company has undertaken a detailed evaluation of its S&S portfolio to identify opportunities to divest, separate and/or rationalize businesses or facilities that are not core to Comtech’s go-forward focus,” the company’s Board said in the announcement.

With this evaluation, Comtech decided to exit its subsidiary operations in Basingstoke, United Kingdom in the fourth quarter. Comtech expects to realize approximately $10 million of annual cash savings with this move.

“The U.K. operations were established in connection with the prior management team’s 2020 acquisition of CGC Technology Limited, which primarily served customers in Europe. Following the acquisition, Comtech continued to invest in the Basingstoke facility to advance LEO constellation-based antenna technologies in anticipation of a significant production order. Taking into consideration the significant ongoing investment as well as unfavorable contract terms on prospective antenna sales, the Board concluded the U.K. business would not generate an attractive return on invested capital and made the decision to exit these operations,” the company explained.