Verizon today announced a deal to acquire Frontier Communications, an Internet service provider with about 3 million customers in 25 states. Verizon said the all-cash transaction is valued at $20 billion.
Verizon agreed to pay $9.6 billion and is taking on over $10 billion in debt held by Frontier. Verizon said the deal is subject to regulatory approval and a vote by Frontier shareholders and is expected to be completed in 18 months.
“Under the terms of the agreement, Verizon will acquire Frontier for $38.50 per share in cash, representing a premium of 43.7 percent to Frontier’s 90-Day volume-weighted average share price (VWAP) on September 3, 2024, the last trading day prior to media reports regarding a potential acquisition of Frontier,” Verizon said.
Assuming regulatory and shareholder approval, Verizon will be buying back a former portion of its network that it sold to Frontier eight years ago. In 2016, Frontier bought Verizon’s FiOS and DSL operations in Florida, California, and Texas. The 2016 changeover was marred by technical problems that caused weeks of outages for tens of thousands of customers.
Frontier, which had also purchased the Connecticut portion of AT&T’s network, struggled for many years and filed for bankruptcy in April 2020. It was criticized by regulators for not properly maintaining its copper phone network. Frontier emerged from bankruptcy in 2021 with a plan to upgrade many of its outdated copper DSL locations with fiber-to-the-home service.
“Frontier’s 2.2 million fiber subscribers across 25 states will join Verizon’s approximately 7.4 million FiOS connections in 9 states and Washington, D.C.,” Verizon said. “In addition to Frontier’s 7.2 million fiber locations, the company is committed to its plan to build out an additional 2.8 million fiber locations by the end of 2026.”
Combined, the Verizon and Frontier fiber networks pass over 25 million premises in 31 states and the District of Columbia, the companies said. Verizon and Frontier both “expect to increase their fiber penetration between now and closing,” they said.
Frontier “complementary” to Verizon’s Northeast market
Frontier has 2.05 million residential fiber customers and 721,000 residential copper DSL customers, according to an earnings report. In the business and wholesale category, Frontier has 134,000 fiber customers and 102,000 copper customers. Frontier reported $1.48 billion in revenue in Q2 2024 and a net loss of $123 million.
Verizon said Frontier’s recent investment in fiber made it a more attractive acquisition target. “Over approximately four years, Frontier has invested $4.1 billion upgrading and expanding its fiber network, and now derives more than 50 percent of its revenue from fiber products,” Verizon said.
Verizon FiOS is available in parts of Connecticut, Delaware, Maryland, Massachusetts, New York, New Jersey, Virginia, Rhode Island, Pennsylvania, and the District of Columbia. Verizon said Frontier’s footprint is “highly complementary to Verizon’s core Northeast and Mid-Atlantic markets,” and will help grow the number of customers who purchase both home Internet and mobile service.
Frontier is available in parts of Alabama, Arizona, California, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Michigan, Minnesota, Mississippi, Nebraska, Nevada, New Mexico, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Utah, West Virginia, and Wisconsin.
