Stamford, Conn.-based independent telco Frontier Communications plans to acquire about 4.8 million access lines in rural markets in 14 states from Verizon Communications for about $5.25 billion in stock. The deal is the biggest move toward rural telco consolidation since last fall's announcement that CenturyTel would acquire Embarq (a company Frontier was once rumored to be pursuing), and it likely will move Frontier to the head of the class among rural telcos. The deal triples its current size and arguably makes it the largest rural telco operator in the U.S. (CenturyTel may end up with more total lines after buying Embarq, though some of those lines are in larger, non-rural markets).
The Wall Street Journal reports that about 11,000 Verizon workers will move to Frontier. The WSJ also says the structure of the deal will call for Verizon shareholders to receive the Frontier stock directly, which will result in those shareholders owning at least 66 percent of Frontier after the deal closes. The companies aim to close the deal within 12 months.
After delays caused by financing market woes and general economic uncertainty, it looks like long-awaited rural telco consolidation is finally taking off. Just this week Windstream Communications announced a deal to buy Pennsylvania's D&E Communications in another step toward further consolidation.
- The Wall Street Journal has this Dow Jones Newswires story
Frontier's 2008 net income was down about 15 percent
CenturyTel's Embarq deal is supposed to close soon
Rural telco consolidation fizzled last year amid market woes