Frontier’s asset strategy in the Verizon transaction
April 1, 2016, is the expected completion date of Frontier Communications’ (FTR) acquisition of Verizon’s wireline assets in California, Florida, and Texas. According to Frontier, this is a ~$10.5 billion deal, and the company plans to harness as many opportunities as possible from the assets.
During the recently held Deutsche Bank Media, Internet and Telecom Conference, Frontier’s executive vice president and CFO (chief financial officer) John M. Jureller shed light on these plans. He said, “I think you’ll see the first couple of quarters under our ownership for California, Texas and Florida being one of ensuring that we keep our customer base. So probably less of a marketing focusing in growing share, grabbing net new customers. We first want to stabilize, keep those customers.” He added, “But we see it as a really near-term opportunity to bend the trend for the copper broadband customer base in these three states.”
Customer base of assets in the Verizon transaction
As you can see in the above bar graph and according to Frontier, the figures for the connections in the assets in the Verizon transaction were ~1.2 million, ~2.1 million, and ~3.3 million for Fios video, broadband, and voice components, respectively, at the end of 2015.
For a diversified exposure to select telecom companies in the United States, you may consider investing in the SPDR S&P 500 ETF (SPY). SPY held a total of ~2.4% in AT&T (T), Verizon (VZ), CenturyLink (CTL), Frontier Communications (FTR), and Level 3 Communications (LVLT) at the end of December 2015.
In the next part of this series, we’ll see whether the Verizon transaction could boost Frontier’s video proposition.