Verizon Acquires Frontier in $20 Billion Deal to Enhance Fiber Network in the U.S., Reports Reuters

By Deborah Mary Sophia and Harshita Mary Varghese

Verizon announced on Thursday its plan to acquire Frontier Communications, a fiber-optic internet provider, in an all-cash transaction valued at $20 billion. This move aims to expand the U.S. wireless carrier’s subscriber base.

The acquisition is intended to enhance Verizon’s competitive edge against major rivals, AT&T and T-Mobile, who are focusing on unlimited plans and bundled services.

Verizon has proposed a purchase price of $38.50 per share for Frontier, which represents a 37.3% premium compared to Frontier’s stock price on September 3, the day before news of the acquisition surfaced.

As of June 30, Frontier reported total debt of $11.25 billion, which Verizon plans to refinance as part of the acquisition.

After a significant surge of nearly 38% in the previous session, Frontier’s shares were trading at $35.10, below the offered price, while Verizon’s stock experienced a slight decline.

Frontier boasts approximately 2.2 million fiber subscribers across 25 states, adding to Verizon’s existing 7.4 million fiber users in nine states and Washington, D.C.

Verizon CEO Hans Vestberg described the acquisition as a strategic fit, noting that it presents an opportunity to enhance competitiveness in various markets.

Together, the combined companies will have access to 25 million fiber passings, which refers to potential customer locations that a fiber network reaches. In comparison, AT&T has an estimated 28 million such locations, according to industry analysts.

The deal is anticipated to close within 18 months, allowing Verizon to broaden its reach beyond its fiber network, which is primarily located in the Northeast and mid-Atlantic, to incorporate Frontier’s services in multiple states, including those in the Midwest, Texas, and California.

This acquisition also marks a return to a previous relationship, as Verizon sold its TV and internet business in California, Texas, and Florida to Frontier in 2016 for $10.54 billion, which included a section of its fiber networks and customer base.

Analysts suggest the deal is likely to provide only a modest enhancement to Verizon’s market position.

Currently, Verizon’s fiber network covers less than 10% of the U.S., and this acquisition is expected to expand its coverage by roughly another 3%. In contrast, AT&T covers less than 15%. Analyst Craig Moffett from MoffettNathanson remarked that while the acquisition moves Verizon from "small to a little bit less small," it does not create a clear path to achieving significant scale in the fiber market.