Frontier acquires Verizon wireline assets in 3 states for $10.5B

Verizon (NYSE: VZ) has made it official today that it is selling off wireline assets in three states to Frontier Communications for $10.5 billion. In a separate deal, Verizon is also selling over 11,300 of its company-owned wireless towers to American Tower Corporation for $5 billion. 

By completing the wireline asset transaction to Frontier, Verizon gains two potential benefits: It can concentrate its wireline operations on the East Coast while paying down debt related to its recent purchase of AWS-3 spectrum.

Under the terms of the agreement, Frontier is purchasing Verizon's wireline operations in California, Florida and Texas, three remaining GTE properties. Each of these properties will be flash cut onto Frontier's systems at the time of closing the deal.

Today, Frontier has access lines in 28 states, providing a series of voice, broadband and video services, including the rural assets in 14 states it purchased from Verizon in 2010.

As of the end of the fourth quarter of 2014, Verizon's operations in these three states served: 3.7 million voice connections; about 2.2 million broadband customers, including about 1.6 million FiOS Internet customers; and approximately 1.2 million FiOS Video customers.

The transaction includes Verizon's FiOS Internet and Video customers, switched and special access lines, as well as its high-speed Internet service and long-distance voice accounts in these three states. Frontier will continue to provide video services in these states after the completion of the transaction.

However, the deal does not include the services, offerings or assets of other Verizon businesses, such as Verizon Wireless and Verizon Enterprise Solutions.

A key element of the deal is that it will enhance Frontier's FiOS fiber-to-the-home (FTTH) service base, which will consist of a total of seven states. Frontier currently operates FiOS in Washington, Oregon, Indiana and South Carolina and said it "is system ready for expanded FiOS operations." In preparation to deal with the new FiOS customer base, Frontier has built a number of back office OSS systems.

While this is the largest acquisition Frontier has made, the service provider said it has plenty of experience to deal with the new integration challenges. As part of the 2010 Verizon acquisition, Frontier converted 13 GTE platform states onto its own system. Later, in 2014 Frontier completed its acquisition of AT&T's wireline assets in Connecticut--one that enhanced Frontier's presence in the state, including the addition of U-verse video and broadband services to its portfolio.

Similar to the companies' previous transaction in 2010, Verizon and Frontier transition teams will work to ensure that customer accounts, billing information and other assets from the operations are transferred to Frontier and that the transition is seamless for customers as well as employees.

"Frontier has a solid track record of successful integrations, and we welcome the new employees who will help us implement our local engagement model in these markets," said Maggie Wilderotter, Frontier's chairwoman and CEO, in the release announcing the acquisition.

When they complete the acquisition, about 11,000 Verizon employees will join Frontier. Frontier and Verizon said they will provide "a smooth transition for these employees."

After meeting customary closing conditions including, obtaining federal and state regulatory approvals, the two companies hope to complete the transaction in the first half of 2016.

For more:
- see the release

Editor's Corner: Verizon's desire to sell parts of its wireline network could kick off new consolidation trend

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