Verizon (NYSE: VZ) recently confirmed that it would sell off its wireline assets in three markets to Frontier, but Fran Shammo, EVP and CFO of Verizon, hinted that the company may sell more non-strategic assets.
Speaking to investors during the Morgan Stanley Technology, Media & Telecom Conference 2015, Shammo said the company would sell other assets if it deems they're not strategic to its current and future network and service goals.
This was the case with the Frontier wireline properties it sold off in Florida, Texas and California.
"For the right price and right terms, if there's an asset we don't believe is strategic to Verizon and can return shareholder value, we'll dispose of that asset," Shammo said. "If you look at Florida, Texas and California, these are three island properties and FiOS is a small footprint of those properties compared to the copper footprint except for Florida because it was just Tampa."
By selling those properties, Verizon will be able to purchase more wireless spectrum, do the share buyback program and delever the balance sheet, which was part of its Vodafone transaction.
"Given that transaction and what we committed to, we are right on track with doing that," Shammo said.
So what about FiOS? By selling off these properties to Frontier, Verizon's FiOS footprint would be in the Northeast.
While many cities continue to hope that Verizon will bring FiOS to their area, Shammo maintained that it will only honor existing local franchising authority (LFA) agreements in areas like Philadelphia, New York and Washington, D.C., but did not mention any plans to expand into new areas.
"You should expect wireline capex to trend up and wireline capex to trend down," Shammo said. "Within the wireline business we still have legitimate LFAs that we have to complete in cities like New York City, Philadelphia and D.C."
Similar to the deal it made with Frontier in 2010 to sell off its wireline assets, particularly former GTE properties in 14 rural states, Verizon said that there won't be any dilution to the wireline margins when it completes the latest deal with the telco next year.
"We have a year to plan for this and the plan is similar to what we did with the last time we rolled properties out from Frontier, we'll plan to offset the stranded costs," Shammo said. "You saw a little bit of that in the fourth quarter where we had 2,100 people come off payroll so you already see how we're going through this year to make sure at the time of close we will have offset the cost structure to make sure the wireline margin stays the same."
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