Verizon is set to acquire Frontier Communications in a $20 billion transaction aimed at bolstering its fiber network. Verizon Communications Inc. announced Thursday that this acquisition will not only enhance its fiber capabilities but also support its ventures into artificial intelligence and connected smart devices.
Over the past four years, Frontier has heavily invested $4.1 billion in upgrading and expanding its fiber network, resulting in more than half of its revenue now coming from fiber products. Based in Dallas, Frontier boasts 2.2 million fiber subscribers across 25 states, making the $20 billion price tag a substantial figure.
Currently, Verizon has approximately 7.4 million Fios connections in nine states and Washington, D.C., while Frontier has 7.2 million fiber locations and plans to expand by an additional 2.8 million locations by the end of 2026.
Hans Vestberg, Chairman and CEO of Verizon, expressed confidence in the deal, stating, “The acquisition of Frontier is a strategic fit. It will build on Verizon’s two decades of leadership at the forefront of fiber and is an opportunity to become more competitive in more markets throughout the United States, enhancing our ability to deliver premium offerings to millions more customers across a combined fiber network.”
Despite this optimism, there are skeptics. Craig Moffett of MoffettNathanson Research pointed out that “Frontier’s paltry 3.5% national fiber coverage would leave Verizon with a combined fiber footprint that still covers less than 13% of the country, with a path to potentially take that only to about 17% of the country.” He argued that such a coverage is inadequate for a national wireless operator.
Verizon, headquartered in New York City, will pay $38.50 per Frontier share, with the deal expected to close in about 18 months, pending approval from Frontier shareholders. Shares of Frontier Communications Parents Inc., which had surged nearly 40% following a report from the Wall Street Journal, fell 9% on Thursday, while Verizon’s stock experienced a slight dip.
