Behind Verizon’s Wireline Asset Sale Transaction with Frontier



Verizon’s wireline assets

According to a recent Verizon Communications’ (VZ) press release, the telecom company’s transaction “of its sale of local landline assets, operations and businesses in California, Florida, and Texas” with Frontier Communications (FTR) will be completed in April 2016. Moreover, according to the company, “the sale does not include the services, offerings or assets of other Verizon businesses, such as Verizon Wireless and Verizon Enterprise Solutions.”

According to the press release, “the transaction is valued at approximately $10.5 billion (approximately $7.5 billion net of income taxes), subject to certain adjustments and including Frontier’s assumption of $0.6 billion in debt.”

Behind Verizon's Wireline Asset Sale Transaction with Frontier

Verizon’s press release also highlighted that “the transaction concentrates Verizon’s landline operations in contiguous northeast markets—which will enhance the efficiency of the company’s marketing, sales and service operations across its remaining landline footprint.”

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Wireline assets in the Verizon transaction

According to Frontier Communications (FTR), Fios penetrates a majority of the assets in the Verizon transaction. Fios is a fiber-based voice, Internet, and video service comparable to AT&T’s (T) U-verse. Both these services can be compared to some offerings of cable players such as Comcast (CMCSA).

According to Frontier, the numbers for connections in the assets from the Verizon transaction were ~1.2 million, ~3.3 million, and ~2.1 million for Fios video, voice, and broadband components, respectively, at of the end of 2015.

Instead of taking a direct exposure to Verizon’s stock, you may take a diversified exposure to the telecom company by investing in SPDR Dow Jones Industrial Average ETF (DIA). The ETF held ~2.1% in the telecom company at the end of March 2016.

Continue to the next part for a look at Frontier’s operations after this transaction.


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