Frontier, Verizon Deal Could Expand Broadband to More Rural Areas

By Jessica Davis  |  Print this article Print


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Frontier Communications will purchase 4.8 million access lines from Verizon, making Frontier the biggest rural telecom provider in the country. Frontier says it plans to expand broadband services in these areas. Verizon says the deal will help accelerate Verizon's focus on wireless, broadband and global IP.

Looking to focus on large markets and divest itself of rural landlines, Verizon (NYSE:VZ) will sell 4.8 million access lines in 14 states to Frontier Communications (NYSE:FTR).

The all-stock $8.6 billion deal will puts Frontier at the top of the heap in terms of rural telecommunications providers, and it will make Frontier the nation’s fifth largest incumbent local exchange carrier (ILEC), the companies said in a statement.

"This is a truly transformational transaction for Frontier," Frontier Chairman and CEO Maggie Wilderotter says in a formal statement issued by the company. "With more than 7 million access lines in 27 states, we will be the largest pure rural communications provider of voice, broadband and video services in the U.S."

Wilderotter adds that Frontier expects to dramatically increase broadband penetration in these markets.

For Verizon, the deal is part of the telecom provider’s multiyear effort to put more focus on wireless, broadband and global IP, according to Chairman and CEO Ivan Seidenberg.

"Frontier knows how to run wireline communications services well and has a top-notch management team to take these properties to the next level," he says in a prepared statement. "I am confident the company will provide the employees in these states with opportunities as it focuses on growth and an expanded portfolio of products in those markets."

The sale includes all of Verizon’s phone lines in Arizona, Idaho, Illinois, Indiana, Michigan, Nevada, North Carolina, Ohio, Oregon, Sough Carolina, Washington and West Virginia, plus some lines in border areas of California.

Approximately 11,000 Verizon employees will move to Frontier as a part of the deal.

Frontier will offer broadband, new bundled services and expanded technologies to customers across its expanded geographic footprint.

According to the terms of the deal, existing Verizon shareholders will receive stock issued by Frontier for the purchase. Verizon will establish a separate newly formed entity called SpinCo for its local exchanges and related business assets in 14 states. SpinCo will be spun off to Verizon’s shareholders and simultaneously merged with and into Frontier. The companies said the transaction has been approved by their respective boards and the deal is expected to be completed within 12 months.

Frontier says that for the fiscal year ended 2008, the combined company will have had on a pro forma basis revenue in excess of $6.5 billion

Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com

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