Frontier's Verizon asset acquisition gets favorable proposed decision from California judge

Frontier Communications took another step forward in its pending acquisition of Verizon's (NYSE: VZ) wireline assets in California, Florida and Texas as an administrative judge with the California Public Utilities Commission (CPUC) issued a favorable Proposed Decision (PD) recommending the deal be approved.

Frontier and other parties interested in the outcome of the purchase will be filing comments on the PD by Nov. 20. If the CPUC approves the acquisition, Frontier said it's on track to close the acquisition by the end of the first quarter of 2016.

Kathleen Abernathy, EVP of external affairs for Frontier said in a release that it "will continue to work through any remaining issues raised in the PD and address them in our comments, which are due in a few weeks."

The full CPUC is expected to vote on the PD by the end of the year, which follows the original schedule set out by Commissioner Catherine Sandoval and Administrative Law Judge Karl Bemesderfer.

California is the last approval Frontier needs to complete its acquisition of the assets next year. It has already received all of the necessary federal regulatory approvals, including the FCC and Department of Justice, while the Texas PUC also signed off on the deal.

Frontier also reached agreement with California workers represented by the Communications Workers of America (CWA) District 9 union, clearing another obstacle to complete its acquisition of Verizon's wireline business in the state.

Winning approval from the CPUC is important as the state's wireline infrastructure has come under attack in recent months.

In September, the CPUC launched an investigation into AT&T's (NYSE: T) and Verizon's management of copper networks. Citing instances of substandard service quality, the CPUC voted four-to-one to examine the physical condition of the two telco's copper networks in the state. The CPUC set a six-month timetable to conduct an examination of AT&T and Verizon's copper networks.

Regardless of this investigation, Frontier appears to be committed to enhancing the network it will acquire in California by leveraging a mix of its own capital and funds from CAF-II.

Verizon said in an FCC filing that it conditionally accepted the CAF-II offer of $32 million in California and $17 million in Texas, annually. Separately, Frontier also accepted $283 million in annual CAF-II support from the FCC that it says will enable it to build out broadband service to over 650,000 rural locations.

For more:
- see the release

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