Verizon buys Frontier for $9.6 billion in broadband push

(Times of Update) — Verizon Communications Inc. has agreed to buy rival telecom parent Frontier Communications Inc. for about $9.59 billion as the New York-based phone giant seeks to expand its broadband internet business.

Times of Update’s most read articles

Frontier shareholders will receive $38.50 per share, a 37 percent premium to its closing price of $28.04 on Tuesday, the day before it announced a pending deal, Verizon said in a statement Thursday. The deal values ​​the Dallas-based company at $20 billion, including debt. Frontier shares jumped 38 percent Wednesday after the Wall Street Journal first reported the two companies were in deal talks. They fell 8.6 percent at the open in New York on Thursday to $35.35, below the offer price. Verizon was little changed.

Telecommunications companies like Verizon are adding to their fiber assets to meet customers’ growing data usage as wireless revenue slows. Data traffic is expected to increase further as more companies embrace artificial intelligence. In July, T-Mobile US Inc. said it would invest $4.9 billion in a joint venture with private equity firm KKR & Co. to buy fiber-optic internet service provider Metronet.

The deal integrates Frontier’s fiber network into Verizon’s portfolio of fiber and wireless assets, including its Fios offering. Over the past four years, Frontier has invested $4.1 billion to modernize and expand its fiber network. Its 2.2 million fiber subscribers in 25 states will join Verizon’s nearly 7.4 million Fios customers in nine states and Washington, D.C. Verizon plans to build an additional 2.8 million fiber sites by the end of 2026, adding to Frontier’s 7.2 million sites, the companies said.

Verizon Chief Executive Hans Vestberg said the acquisition would allow the company to “become more competitive in more markets” in the United States.

Verizon’s deal “would signal a deeper commitment to a fiber-optic broadband strategy and future-proof its broadband footprint with the best long-term support to deliver the service,” Times of Update Intelligence analyst John Butler wrote Wednesday after news reports of an impending acquisition. “A deal would put Verizon’s consumer fiber subscriber base ahead of rival AT&T’s by increasing its base to 9.1 million from AT&T’s 8.8 million.”

The boards of directors of Verizon and Frontier have approved the deal, which is expected to close in about 18 months if shareholders and regulators approve it. Verizon also reaffirmed its full-year guidance in the statement. The companies said the transaction is expected to be positive on revenue and adjusted earnings before interest, taxes, depreciation and amortization growth rates at closing. It is expected to be positive on earnings per share starting in 2027. Verizon expects at least $500 million in cost synergies at a current rate by year three.

The story continues

Frontier launched an internal review of its business earlier this year. The company has come under pressure…