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In brief: Verizon has agreed to purchase Frontier Communications, the largest pure-play ISP in the US, as part of a deal valued at $20 billion. The telecom giant said the strategic acquisition will enable faster deployment of top-tier mobility and broadband services to new and existing customers.
Frontier currently serves 2.2 million fiber Internet subscribers across 25 states. Once the deal is finalized, they will join Verizon’s 7.4 million Fios subscribers in nine states and Washington, DC, giving the ISP a presence in 31 states that passes over 25 million premises.
The nation’s largest wireless provider, with 156 million subscribers, is paying $38.50 per share for Frontier. That is a 43.7 percent premium over Frontier’s trailing 90-day average share price. Verizon will also take over Frontier’s debt holdings, according to Ars Technica. The deal is subject to approval by Frontier shareholders, and is expected to close in roughly 18 months pending customary regulatory approval.
In the interim, both service providers plan to further build out their fiber networks. Frontier said it is committed to building an additional 2.8 million fiber locations by the end of 2026.
Not everyone is convinced the acquisition is that big of a deal. Craig Moffett with MoffettNathanson Research told AP News that the “real issue” is that even with Frontier’s network, Verizon’s fiber footprint will cover less than 13 percent of the nation. Even with a path to covering 17 percent of the country, Moffett notes, it is not nearly enough for a national wireless provider.
Even if it does not substantially grow Verizon’s fiber footprint, the deal has its upsides. Verizon said it expects at least $500 million in run-rate cost synergies by year three thanks to increased scale, distribution, and network integration.
This is not the first time Verizon and Frontier have crossed paths. In 2016, Frontier purchased Verizon’s Internet, TV, and landline phone business in California, Florida, and Texas for $10.5 billion. The acquisition doubled Frontier’s size at the time.
Image credit: Ildefonso Polo
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