In a move to shed some of its debt, Frontier Communications announced Wednesday that it's selling off assets and operations in Washington, Oregon, Idaho and Montana for $1.35 billion.
WaveDivision Capital, in partnership with Searchlight Capital Partners, is buying Frontier's assets in the four states in a deal that is expected to close within one year once it passes closing conditions and regulatory approvals.
Frontier is trying to right the financial ship and improve its liquidity by selling off various assets. At the start of the year, Frontier sold off nearly 100 wireless towers in Connecticut, New York and California to Pittsburgh-based Everest Infrastructure Partners for $80 million.
“The sale of these properties reduces Frontier’s debt and strengthens liquidity,” said Frontier President and CEO Dan McCarthy in a statement. “We are pleased to have a buyer with extensive experience building and operating advanced fiber-based communications assets in these regions. We will be working very closely with the new owners to ensure a smooth, successful transition for our customers and the communities we serve.”
Across the four states, WaveDivision is gaining more than 350,000 residential and commercial customers, and a that network passes 1.7 million locations, including 500,000 that are fiber-to-the-premise (FTTP) capable. As of March, Frontier served approximately 150,000 fiber broadband, 150,000 copper broadband and 35,000 video connections in the four states.
WaveDivision Capital, which is led by broadband entrepreneur Steve Weed, and Searchlight have formed a new company to operate the business and honor existing customer commitments and contracts after the transaction closes. In the meantime, Frontier will continue to operate the business and serve customers with existing products and services until the transaction closes.
Wave Broadband, Grande Communications and RCN Communications are all owned by TPG Capital. TPG paid $2.25 billion three years ago to buy Grande and RCN and then bought Wave last year from Weed for about $2.36 billion.
Four years ago, Frontier bought Verizon's wireline operations in California, Florida and Texas for $10.5 billion. In 2010, Frontier purchased Verizon's rural wireline assets in 14 states for $6.8 billion. Later, Frontier purchased AT&T's Connecticut wireline operations for $2 billion.
Frontier was dogged by integration issues across the former Verizon operations, and it bought them when the growth levels in those footprints were starting to taper off. While the operations that Frontier bought from Verizon were among the first to get Verizon's FiOS broadband service, the high penetration rates didn't leave a lot of headroom for growth.
Earlier this month at an investor conference, McCarthy said Frontier's fiber assets, improved field operations and customer care were key points in the company's turnaround efforts, which, in addition to reducing debt, also include lowering churn.