Pair of deals expected to generate $15.5B for Verizon
Verizon Communications continues to hone its operations, announcing a deal to sell off wireline properties in California, Florida and Texas for $10.5 billion as well as a separate deal to sell off 11,465 towers for $5 billion.
The wireline deal will see Verizon sell all of its wireline operations in those three states to Frontier Communications for $9.9 billion in cash and the assumption of $600 million in debt. The proposed deal includes Verizon’s FiOS Internet and video customers, switched and special access lines, high-speed Internet service and long-distance voice accounts in the three states.
At the end of last year, Verizon said those properties served approximately 3.7 million voice connections; approximately 2.2 million high-speed data customers, including approximately 1.6 million FiOS Internet customers; and approximately 1.2 million FiOS video customers.
Frontier will also receive approximately 11,000 Verizon employees as part of the transaction. The deal will not include assets related to Verizon’s wireless or enterprise business.
Verizon said it will continue to operate its wireline business focused in the Northeast, which is currently offered across nine states and the District of Columbia. Those operations serve approximately 16.1 million wireline voice connections; 7 million high-speed data customers, including approximately 5.1 million FiOS Internet customers; and 4.5 million FiOS video customers.
“These transactions will further strengthen Verizon’s focus on extending our industry leadership position in our core markets and return significant value to our shareholders,” noted Verizon CEO Lowell McAdam in a statement.
In connection with the deals, Verizon said it will purchase $5 billion worth of its stock in an accelerated share-repurchase program, which will use cash on hand and is scheduled for the second quarter of the year. Verizon last year announced plans to acquire 100 million shares of common stock under a still intact 3-year program.
In addition to the stock program, the cash infusion can help Verizon pay down recently incurred debt tied to the $10.4 billion in new licenses it acquired in the Federal Communications Commission’s Auction 97, as well as the $130 billion it paid to Vodafone to gain full control of Verizon Wireless.
For Frontier, the deal bolsters its wide-ranging wireline operations, which stretch across 28 states and includes assets previously acquired from Verizon. Those assets included wireline operations across 14 states that Frontier purchased for $8.6 billion.
“These properties align with Frontier’s disciplined strategic focus and enhance our footprint with rich fiber-based assets,” said Maggie Wilderotter, chairman and CEO at Frontier. “We look forward to building on the strong results Verizon has delivered in these three states. Frontier has a solid track record of successful integrations, and we welcome the new employees who will help us implement our local engagement model in these markets.”
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