With one of its final state PUC approvals from California in place, Frontier's chief financial officer is confident that when the service provider does complete the acquisition of Verizon's (NYSE: VZ) wireline assets in March it will be able to increase broadband penetration in the residential and small to medium business (SMB) segments of these markets.
Speaking to investors during the UBS 43rd Annual Global Media and Communications Conference, John Jureller, CFO of Frontier, told investors that the carrier sees opportunities to grow FiOS and even DSL market share in these three markets.
While these markets are already highly penetrated with copper and fiber-based broadband, the service provider plans to continue to find ways to penetrate more customers.
In addition to FiOS, the service provider reiterated its dedication to expand its copper-based network facilities to support higher DSL speeds of 25 Mbps and above.
"Broadband and FiOS penetration in these markets is very high, but they continue to grow," Jureller said. "Our opportunity is in two ways in that we'll continue with FiOS, but also in the non-FiOS markets where we have been growing our capabilities is to bring that into these markets in California, Florida and Texas and grow DSL broadband."
But residential broadband is only one part of the potential benefits Frontier will gain from this acquisition. It will also be able to enhance its SMB customer base.
"In the first Verizon transactions we were not strong in the small and medium sized business marketplace," Jureller said. "We built that capability over the last five years and we're going to bring in these three states to build on what Verizon has in those markets."
At the same time, Jureller said that there are a number of differences with this deal and acquisition of Verizon's rural assets in 2010.
He said that the latest has three things that the other deal did not have: a large FTTH network, a flash-cut transition, and local management.
One of the big differences is that 54 percent of the last mile network Frontier is acquiring is based on FTTH.
"It's a much better network and much more enhanced network than what we acquired across 1 states, and because it's a flash cut across all properties on that first day and against what it means it allows to deliver on our anticipated synergies sooner off of one billing system, one provisioning system," Jureller said. "From a financial perspective, we look at the big driver how we can take out the allocated costs, which come out on day one and our replaced with our cost systems."
No less important is management. The service provider will also gain local management and operation teams that have knowledge of how to run and operate the assets.
"The next element of this is management," Jureller said. "We're taking on not only a great labor workforce with our CWA and IBEW colleagues, but also our management teams that have run these properties in these three states."
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