Verizon has revealed that it's expanding its fiber network by preparing to buy Frontier Communications in a cash deal worth $20 billion. The acquisition aims to help Verizon recapture 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 premium of 36.3% to Frontier’s closing price on the 3rd September. The deal is set to close in 18 months, and is expected to help Verizon compete against premium broadband services such as AT&T.
Frontier reported a debt of $11.25 billion as of June 30th 2024, and under the current terms of the deal, Verizon will pay Frontier a fee of $590 million. The company brings 2.2 million subscribers to combine with Verizon's 7.4 million FiOS connections.
Mutually beneficial
The deal is predicted to generate at least $500 million in annual run-rate cost savings by its third year of operation. Frontier’s coverage primarily serves the Midwest, Texas, and California, whilst Verizon focuses on the North East and Mid-Atlantic. Verizon CEO Hans Vestberg comments, “The acquisition of Frontier is a strategic fit. It will build on Verizon's two decades of leadership...and is an opportunity to become more competitive in more markets throughout the U.S.”
Verizon has reaffirmed its commitment to building a best in class network and delivering high-speed broadband. This comes just months after Frontier Communications launched its ‘Good to Go’ campaign, which aimed to deliver fiber technology that will span a customer’s lifetime.
This Verizon deal is set to expand the company’s coverage and offer faster service to a wider range of customers. Broadband companies are each looking for ways to gain an edge over their competitors, with AT&T looking to space to provide supplementary coverage, using satellites to provide service to areas with unreliable connections.
Via CNBC
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