American telecommunications company Verizon Communications has agreed to acquire Frontier Communications (Frontier) in an all-cash transaction valued at USD 20 billion. Verizon said this acquisition of the largest pure-play fiber internet provider in the US will significantly expand its fiber footprint nationwide, enabling the delivery of mobility and broadband services to both existing and new customers. Verizon expects the deal to be accretive to revenue and adjusted EBITDA upon closing, with the potential to generate at least USD 500 million in annual run-rate cost synergies.
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Premium Price and Synergy Goals
Under the agreement, Verizon will pay USD 38.50 per share in cash, representing a 43.7 percent premium over Frontier's 90-day volume-weighted average share price as of September 3, 2024. The acquisition will integrate Frontier's fiber network into Verizon's portfolio of fiber and wireless assets, including its Fios service.
Frontier's Fiber Footprint
Frontier currently serves 2.2 million fiber subscribers across 25 states. Over the past four years, the company has invested USD 4.1 billion to upgrade its fiber network, which now contributes over 50 percent of its revenue. Verizon, which already has 7.4 million Fios connections, will add Frontier's 7.2 million fiber locations and benefit from Frontier's plans to build 2.8 million more by 2026.
Verizon said: "The acquisition of Frontier is a strategic fit. It builds on Verizon's two decades of leadership in fiber and presents an opportunity to become more competitive in more markets across the United States, enhancing our ability to deliver premium offerings to millions of additional customers through a combined fiber network."
"Today's announcement recognises our progress in building a best-in-class fiber network and delivering reliable, high-speed broadband to millions of customers across the country. It also signals confidence in the future of fiber," Frontier added.
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Integration of Fiber Networks
"Today, Verizon and Frontier have approximately 10 million fiber customers across 31 states and Washington DC with fiber networks passing over 25 million premises, and both companies expect to increase their fiber penetration between now and closing," the companies said in a joint statement on Thursday.
The acquisition has been unanimously approved by the Boards of Directors of Verizon and Frontier and is expected to close within 18 months, pending shareholder and regulatory approvals.
