Verizon sold assets to Frontier Communications
In this series, we’ll look at the status Verizon’s recent transactions. Verizon (VZ) declared its results on April 21, 2015. Verizon moved the assets and liabilities of its transaction with Frontier Communications to the held-for-sale category in its 1Q15 balance sheet. Earlier, Verizon signed the agreement for the sale of its wireline assets in Florida, California, and Texas to Frontier Communications (FTR). According to Frontier Communications, the wireline asset transaction is worth ~$10.54 billion.
The agreement for this proposed wireline asset sale was signed on February 5, 2015. Currently, the transaction is being reviewed by regulatory agencies including the FCC (Federal Communications Commission). This wireline asset sale transaction is expected to be complete in 1H16.
Factors that impacted Verizon’s decision to sell the assets
Large integrated telecom companies, like Verizon and AT&T (T), rationalize their non-strategic wireline operations to manage profitability. Both of these telecoms’ wireline divisions continue to face challenges of declining legacy voice and other services in their copper networks.
According to Verizon, the held-for-sale assets in the three states have a network that’s mainly copper. Also, Verizon wanted to focus on its existing key operations on the East Coast. Therefore, it went ahead with the proposed transaction.
If you want to get diversified exposure to Verizon, you can consider investing in the Technology Select Sector SPDR Fund (XLK). XLK held ~5% in Verizon on March 31, 2015.
Also, you can get extremely diversified exposure to Verizon by investing in the SPDR S&P 500 ETF (SPY). SPY held ~1.1% in Verizon at the end of March.