Verizon has announced that it is expanding its fiber network by preparing to acquire Frontier Communications in a cash deal worth $20 billion. The acquisition is intended to help Verizon reclaim fiber lines that were sold in 2016 as part of a TV and internet deal in California, Texas and Florida.
Verizon offered $38.50 per share, a 36.3% premium to Frontier’s closing price on Sept. 3. The deal is expected to close in 18 months and is expected to help Verizon compete with premium broadband providers like AT&T.
Frontier reported $11.25 billion in debt as of June 30, 2024, and under the current terms of the deal, Verizon will pay Frontier a $590 million fee. The company brings together 2.2 million subscribers with Verizon’s 7.4 million FiOS connections.
Mutually beneficial
The deal is expected to generate at least $500 million in annual run-rate cost savings by the third year of operation. Frontier’s footprint is primarily focused on the Midwest, Texas and California, while Verizon focuses on the Northeast and Mid-Atlantic. Verizon CEO Hans Vestberg noted, “The acquisition of Frontier is a strategic fit. It builds on Verizon’s two decades of leadership … and is an opportunity to become more competitive in more markets across the U.S.”
Verizon has reaffirmed its commitment to building a best-in-class network and delivering blazing-fast broadband. This comes just months after Frontier Communications launched its ‘Good to Go’ campaign, which focused on delivering fibre technology that will span a customer’s lifetime.
This Verizon deal will expand the company’s coverage and provide faster service to a wider range of customers. Broadband companies are all looking for ways to get an edge over their competitors, with AT&T looks to space to provide additional coverage, using satellites to provide service in areas with unreliable connections.
Via CNBC
