Shares of Frontier Communications up on the news of FCC approval
Verizon Communications sale of its local wireline network assets and operations in California, Florida and Texas to Frontier Communications for $10.54 billion is a go.
The Federal Communications Commission on Sept. 2 gave the sale a green light, and the transaction is expected to close by the end of first-quarter 2016. As of midday Thursday (Sept. 3), shares of Frontier Communications were up 5.6% to $5.50 on news of the FCC approval.
“We appreciate the FCC’s thorough review and timely approval, which confirms that this transaction is in the public interest and will benefit customers in California, Florida and Texas,” said Michael Glover, Verizon Communications’ SVP and deputy general counsel of public policy and government affairs, in a statement. “Last May, the U.S. Department of Justice also reviewed and cleared the proposed sale, further confirming that the transaction does not present market competition issues. With these approvals in hand, we look forward to promptly receiving the remaining regulatory approvals in the coming months.”
Meanwhile, Frontier President and CEO Daniel McCarthy said in a statement: “We are pleased the FCC moved swiftly and smartly to approve this acquisition, releasing an order in advance of the FCC’s internal deadline for review of such transactions. The FCC views this transaction as being in the public interest and benefiting customers in the three acquired states.”
The deal was first announced in early February.
The terms of the transaction include Verizon selling 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 sale 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.
Earlier this week, the FCC announced 10 communications service providers accepted $1.5 billion from the federal government as part of the regulatory agency’s Connect America, a subsidy designed to encourage the development of broadband infrastructure in rural or low-income areas.
Under terms of the agreement, each carrier has committed to bringing broadband speeds of at least 10 megabits per second to 7.3 million rural customers over the next six years. Each carrier will need to build out 40% of funded locations by the end of 2017, 60% by the end of 2018 and 80% by the end of 2019, reaching completion in 2020.
The three largest carriers receiving funds included CenturyLink, which will receive $506 million; AT&T with $427 million; and Frontier, which will receive $283 million. The remaining funds will be divided among Cincinnati Bell, Consolidated, Fairpoint, Hawaiian Telecom, Micronesian Telecom and Windstream.
Verizon Communications accepted $48 million in federal funds on behalf of Frontier.
