Verizon to acquire Frontier
September 5, 2024
Verizon Communications and Frontier Communications have entered into a definitive agreement for Verizon to acquire Frontier in an all-cash transaction valued at $20 billion (€18bn).
Verizon says the acquisition of the largest pure-play fibre Internet provider in the US will significantly expand its fibre footprint across the nation, accelerating the company’s delivery of premium mobility and broadband services to current and new customers. It will also expand Verizon’s intelligent edge network for digital innovations like AI and IoT.
The combination will integrate Frontier’s fibre network into Verizon’s portfolio of fibre and wireless assets, including its Fios offering. Over approximately four years, Frontier has invested $4.1 billion upgrading and expanding its fibre network, and now derives more than 50 per cent of its revenue from fibre products. Frontier’s 2.2 million fibre subscribers across 25 states will join Verizon’s approximately 7.4 million Fios connections in 9 states and Washington DC. In addition to Frontier’s 7.2 million fibre locations, the company is committed to its plan to build out an additional 2.8 million fibre locations by the end of 2026.
“Connectivity is essential in nearly every part of our lives and work, and no one delivers better than Verizon,” said Verizon Chairman and CEO Hans Vestberg. “Verizon offers more choice, flexibility and value, and we continuously look for ways to provide the best product and network experience to our customers as we bolster our position as the provider of choice.”
Vestberg added: “The acquisition of Frontier is a strategic fit. It will build on Verizon’s two decades of leadership at the forefront of fibre and is an opportunity to become more competitive in more markets throughout the United States, enhancing our ability to deliver premium offerings to millions more customers across a combined fibre network.”
“Less than four years ago, we set out an ambitious plan to Build Gigabit America, the digital infrastructure this country needs to thrive for generations to come,” added Nick Jeffery, President and CEO of Frontier. “Today’s announcement is recognition of our progress building a best-in-class fibre network and delivering reliable, high-speed broadband to millions of customers across the country. It’s also a vote of confidence for the future of fibre. I am confident that this delivers a significant and certain cash premium to Frontier’s shareholders, while creating exciting new opportunities for our employees and expanding access to reliable connectivity for more Americans.”
Under the terms of the agreement, Verizon will acquire Frontier for $38.50 per share in cash, representing a premium of 43.7 per cent to Frontier’s 90-Day volume-weighted average share price (VWAP) on September 3rd 2024, the last trading day prior to media reports regarding a potential acquisition of Frontier. The transaction is valued at approximately $20 billion of enterprise value.
The transaction has been unanimously approved by the Verizon and Frontier Boards of Directors. The transaction is expected to close in approximately 18 months, subject to approval by Frontier shareholders, receipt of certain regulatory approvals and other customary closing conditions.
Verizon Reaffirms Full-Year 2024 Guidance:
- Total wireless service revenue growth of 2 per cent to 3.5 per cent.
- Adjusted EBITDA growth of 1 per cent to 3 per cent.
- Adjusted EPSof $4.50 to $4.70.
- Capital expenditures between $17 billion and $17.5 billion.
- Adjusted effective income tax rate in the range of 22.5 per cent to 24 per cent.