Verizon's Bold Move: Acquiring Frontier for $20 Billion
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Verizon Expands Reach Through Frontier Acquisition
Key Highlights:
- Verizon increases its scale with 2.2 million fiber subscribers, expanding to 25 million premises across 31 states and Washington, D.C.
- The transaction is valued at $20 billion and is anticipated to positively impact revenue and Adjusted EBITDA growth post-closure.
- Verizon confirms its full-year 2024 financial guidance.
- Expected to yield over $500 million in annual cost synergies.
- Verizon will hold an investor conference call today.
Verizon Communications Inc. (NYSE: VZ) and Frontier Communications Parent, Inc. (NASDAQ: FYBR) have reached a definitive agreement for Verizon to acquire Frontier in a remarkable all-cash transaction worth $20 billion. This strategic move will greatly enhance Verizon's fiber capabilities, gifting it with far-reaching access to premium mobility and broadband services for both existing and new customers.
The acquisition aims to integrate Frontier's advanced fiber network with Verizon’s comprehensive portfolio, which includes its renowned Fios services. Over the past several years, Frontier has dedicated $4.1 billion to upgrade its fiber network, and more than half of its revenue now stems from these fiber products. Frontier's 2.2 million fiber subscribers across a wide geographical spectrum will be added to Verizon's existing customer base which currently stands at approximately 7.4 million Fios connections in 9 states and Washington, D.C. Frontier is also on track to develop an additional 2.8 million fiber connections by 2026.
“Connectivity is crucial for our everyday lives and work, and Verizon is leading the way in delivering it,” stated Verizon's Chairman and CEO Hans Vestberg. He emphasized that Verizon is committed to offering a superior product and network experience to customers while solidifying its position as the preferred provider.
Vestberg remarked on the strategic importance of the Frontier acquisition. It not only bolsters Verizon's two decades of fiber leadership but also enhances their competitiveness in diverse markets, ultimately enabling them to extend premium services to a larger audience.
“Our goal of building a superior digital infrastructure aligns with today’s announcement,” said Nick Jeffery, President and CEO of Frontier. He views this acquisition as an affirmation of the strides made in establishing a top-notch fiber network that provides dependable high-speed broadband. This also offers great value for Frontier's stakeholders, along with new ventures for employees to enhance connectivity for more Americans.
Customer and Strategic Benefits of the Merger
Enhanced Offerings for Customers:
- Verizon's premium services will now be accessible to Frontier’s consumer and small business customers, providing broader options and enhanced access to Verizon’s mobility and home internet offerings.
- The merger creates a leading broadband network with unmatched scalability and distribution; Frontier’s rapidly growing fiber network will integrate smoothly into Verizon’s award-winning Fios network.
- It unifies Frontier's high-quality broadband with Verizon’s mobile services to foster increased customer loyalty and decreased churn rates.
- Verizon will enter Frontier's customer base, which complements its existing northeastern markets, presenting room for improved service delivery.
- This acquisition is in line with Verizon’s strategic plan aimed at expanding its footprint in the nationwide broadband sector.
Financial Upsides of the Acquisition
Robust Financial Benefits:
- Expected to positively influence Verizon's earnings and revenue growth rates.
- Verizon is projected to realize at least $500 million in cost synergies by the third year through network integration and enhanced operational scale.
- The transaction will preserve Verizon’s financial strength and its strategic capital allocation approach post-acquisition.
Additional Details on the Acquisition
The agreement stipulates that Verizon will pay Frontier $38.50 per share in cash, reflecting a 43.7% premium over Frontier’s average share price prior to the acquisition announcement. This $20 billion deal has received unanimous board approval from both companies and is expected to finalize within 18 months, pending shareholder and regulatory approvals.
Verizon has reaffirmed its full-year 2024 guidance, expecting solid growth across various financial metrics.
About Verizon
Verizon Communications Inc. stands at the forefront of mobile connectivity and security services, engaging millions of customers across the globe. In 2023, Verizon reported revenues of $134 billion, demonstrating its commitment to innovation and customer satisfaction.
Verizon Contacts:
Investor Relations: Brady Connor - george.connor@verizon.com
Media: Katie Magnotta - katie.magnotta@verizon.com
About Frontier
Frontier Communications (NASDAQ: FYBR) is leading the charge in fiber connectivity, dedicated to enhancing broadband access nationwide.
Frontier Contacts:
Investor Relations: Spencer Kurn - spencer.kurn@ftr.com
Media: Chrissy Murray - chrissy.murray@ftr.com
Frequently Asked Questions
What is the main reason for Verizon acquiring Frontier?
The acquisition aims to significantly expand Verizon's fiber network, enhancing its ability to deliver premium services to millions more customers.
How much is Verizon paying for Frontier?
Verizon will acquire Frontier for $38.50 per share, totaling approximately $20 billion.
When is the acquisition expected to be completed?
The deal is projected to close within 18 months, subject to regulatory approvals and shareholder consent.
What are the expected financial benefits for Verizon?
The transaction is expected to be accretive to both revenue and Adjusted EBITDA growth rates, as well as generate significant cost synergies.
How will customers benefit from this acquisition?
Customers will gain access to a wider array of services and expanded geographical coverage, enhancing their connectivity options.
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