What’s Happening with Verizon’s Wireline Asset Sale to Frontier?



Verizon’s wireline asset sale

In this series, we will look at some key points that Verizon (VZ) discussed at the recent UBS Global Media and Communications Conference on December 7, 2015. Fran Shammo, Verizon’s chief financial officer, commented on the status of Verizon’s wireline asset sale to Frontier Communications (FTR). This transaction is for the sale of the company’s assets in California, Florida, and Texas.

During the conference, Shammo said, “So we got final California PUC approval just a week ago which was the last hurdle from a regulatory perspective.” He added, “We have some other regulatory hurdles to go through, some other government approvals, but we anticipate that they will be coming in a month or so and we anticipate that we will be ready to close sometime at the end of the first quarter so sometime in the end of March.”

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About the Verizon-Frontier deal

In February 2015, Verizon agreed to the sale of its wireline assets in California, Florida, and Texas to Frontier. This is a ~$10.5 billion deal. As per Frontier, the deal brings ~7.1 million wireline connections and customers, as of the end of 2014, in these three states. In addition, as per Verizon, these connections included ~2.8 million FiOS video and Internet customers as of the same period.

Note that FiOS is Verizon’s fiber-based voice, broadband, and IPTV (Internet protocol television) offering that can be compared to AT&T’s (T) U-verse. These services can also be compared to offerings of cable players such as Comcast (CMCSA).

For a diversified exposure to Verizon, you may consider investing in the iShares Core High Dividend ETF (HDV). The telecom company made up ~6.1% of the ETF at the end of November 2015. The ETF held a total of ~14.2% in telecom players on the same date.


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