Verizon lines up $20B Frontier fibre move

Verizon CEO Hans Vestberg described fixed line player Frontier Communications as a good strategic fit as the US operator confirmed a deal to acquire the company for $20 billion in an all-cash transaction.

Frontier Communications will bring 2.2 million fibre subscribers into Verizon’s fold, increasing the operator’s reach to 25 million premises across 31 US states along with Washington DC.

Verizon expects the acquisition to generate at least $500 million in annual run-rate cost synergies within three years, and to have an immediate positive impact on revenue and adjusted EBITDA growth once completed.

Vestberg said the acquisition of Frontier Communications will boost the operator’s own work in the fibre sector “and is an opportunity to become more competitive in more markets” by enhancing its “ability to deliver premium offerings to millions more customers across a combined fibre network”.

Verizon explained Frontier Communications offers “one of the largest and fastest-growing” consumer fibre networks in the US.

It foresees an easy integration path with its bundled Fios tariff, giving it a combined customer base of around 10 million fibre users.

The operator stated Frontier Communications’ footprint “offers substantial room for increased penetration” in fibre and mobile services, along with expanding its share of the US broadband market.

Verizon offered assurances regarding its liquidity after the acquisition completes, planning to maintain “capital allocation priorities” including “an industry-leading dividend and continued debt reduction”.

Frontier Communications president and CEO Nick Jeffery said the arrangement validates the company’s progress in a fibre deployment intended to deliver “the digital infrastructure this country needs to thrive”.

The deal is backed by the boards of each company and is expected to close in around 18 months, subject to shareholder and regulatory approvals.