Verizon to expand fibre network with USD 20B acquisition of Frontier

Verizon Communications (VZ.N) announced on Thursday that it will acquire fibre-optic internet provider Frontier Communications (FYBR.O) in an all-cash deal valued at USD 20 billion, in an effort to increase the number of its customers.

Additionally, the agreement will make it easier for one of the largest US network providers to take on competitors. Both T-Mobile (TMUS.O) and AT&T (T.N) launch new tabs as they increase their focus on unlimited plans and bundling choices.

Verizon's fibre footprint is anticipated to grow dramatically as a result of this strategic acquisition of the biggest pure-play fiber internet provider in the US, speeding up the company's ability to offer premium mobility and broadband services to both existing and potential consumers. Additionally, it is also expected to increase Verizon's intelligent edge network's capacity for digital advancements like IoT and AI.

Verizon made an offer of USD 38.50 per share, which is 37.3% more than Frontier's closing stock price on September 3, the day before rumors of a possible merger started to circulate.

The merger will combine Verizon's fibre and wireless assets, its Fios service, with Frontier's state-of-the-art fiber network. After spending USD 4.1 billion modernizing and growing its fiber network over the course of around four years, Frontier currently gets more than half of its revenue from fiber products. Verizon's roughly 7.4 million Fios connections1 in nine states and Washington, D.C. will be joined by Frontier's 2.2 million fiber subscribers spread across 25 states. By the end of 2026, Frontier plans to have built out an additional 2.8 million fiber spots in addition to its current 7.2 million locations.

As of June 30, Frontier owed USD 11.25 billion in total debt, which Verizon would restructure as part of the agreement. Frontier's stock was trading at USD 35.10, below the offer price, following a nearly 38% increase in the previous day. Verizon experienced a slight outage.

“Connectivity is essential in nearly every part of our lives and work, and no one delivers better than Verizon,” said Verizon Chairman and CEO Hans Vestberg. “Verizon offers more choice, flexibility and value, and we continuously look for ways to provide the best product and network experience to our customers as we bolster our position as the provider of choice.”

Vestberg added, “The acquisition of Frontier is a strategic fit. It will build on Verizon’s two

decades of leadership at the forefront of fiber and is an opportunity to become more competitive in more markets throughout the United States, enhancing our ability to deliver premium offerings to millions more customers across a combined fibre network.”

Talking on the announcement,Nick Jeffery, Presidentand CEO of Frontier said, “Less than four years ago, we set out an ambitious plan to Build Gigabit America, the digital

infrastructure this country needs to thrive for generations to come, today’s announcement is recognition of our progress building a best-in-class fiber network and delivering reliable, high-speed broadband to millions of customers across the country. It’s also a vote of confidence for the future of fiber. I am confident that this delivers a significant and certain cash premium to Frontier’s shareholders, while creating exciting new opportunities for our employees and expanding access to reliable connectivity for more Americans,” Jeffery added. 

The agreement, which is anticipated to finalize in around 18 months, will enable Verizon, which primarily operates a fiber network in the Northeast and mid-Atlantic, to access Frontier's coverage across a number of Midwest, Texas, and California states.

It would additionally constitute a kind of reunion. In a USD 10.54 billion agreement, Verizon had earlier sold Frontier its TV and internet operations in California, Texas, and Florida in 2016. The sale also included some of Verizon's fiber networks and subscriber base.