In A $20 Billion Transaction, Verizon Will Purchase Frontier To Expand Its Fiber Network

On Thursday, Verizon announced its plan to acquire Frontier Communications in a significant all-cash transaction amounting to $20 billion. 

This strategic move by the U.S. wireless carrier aims to enhance its fiber network infrastructure, demonstrating Verizon’s commitment to expanding its capabilities and strengthening its position in the telecommunications market.

Verizon climbed about 1%

Shares of Frontier Communications experienced a notable decline of more than 9% during premarket trading, marking a significant downturn in investors’ sentiment. In contrast, Verizon displayed resilience as it saw an approximate 1% increase in value. 

This surge in Verizon’s stock price is partly attributed to its recent offer of $38.50 per Frontier share, representing a generous premium of 37.3% over Frontier’s closing price on Sept. 3. The anticipation of this acquisition has stirred much interest in the market as it is expected to reshape the competitive landscape within the telecommunications industry. 

With the deal projected to be finalized in approximately 18 months, Verizon stands to strengthen its position against major rivals such as AT&T by enhancing its capability to provide top-tier broadband services to a broader spectrum of customers. 

Combining Frontier’s sizable base of 2.2 million fiber subscribers across multiple states with Verizon’s existing network of about 7.4 million Fios connections is poised to create a formidable force in the market.

“The acquisition of Frontier is a strategic fit”

While Frontier’s coverage extends throughout several states in the MidWest, Texas, California, and other areas, Verizon’s fiber network is primarily located in the North East and mid-Atlantic regions.

Verizon CEO Hans Vestberg stated “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 United States,”

At closing, the transaction is expected to increase Verizon’s revenue and adjusted earnings before interest, tax, depreciation, and amortization growth and create at least $500 million in annual run-rate cost savings.

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