Verizon Acquires Frontier Communications for $20 Billion

Investing.com — Verizon (NYSE:VZ) confirmed its $20 billion acquisition of Frontier Communications (OTC:FTRCQ) via a press release on Thursday, marking a significant development in the telecommunications sector.

The company anticipates that the $38.50 per share all-cash transaction will greatly enhance its fiber network, expanding its reach to 25 million premises across 31 states, including Washington, D.C.

Frontier shares dropped approximately 8.5% in premarket trading following the announcement.

This acquisition reflects a 43.7% premium over Frontier’s 90-day volume-weighted average share price (VWAP) from September 3, 2024, the day before the media speculated about a potential acquisition.

Additionally, the deal will integrate 2.2 million Frontier fiber subscribers into Verizon’s network, bolstering its capacity to deliver broadband and mobility services.

Frontier has established a strong presence in the fiber internet market, with over 50% of its revenue stemming from fiber products. Verizon currently offers 7.4 million Fios connections and will significantly expand its fiber customer base.

Verizon’s CEO, Hans Vestberg, emphasized the strategic advantage of the acquisition, stating it builds upon the company’s two decades of leadership in fiber. “Verizon provides more choice, flexibility, and value, continually seeking to enhance the product and network experience for our customers while solidifying our position as the preferred provider,” he noted.

The merger is projected to generate $500 million in annual cost synergies, aiding in Verizon’s revenue and Adjusted EBITDA growth. The deal, which has received approval from both companies’ boards, is expected to close in about 18 months, pending regulatory and shareholder approvals.

Frontier CEO Nick Jeffery described the acquisition as a “vote of confidence” in the future of fiber, highlighting the company’s advancements in building a leading network.

In the press release, Verizon also reiterated its full-year guidance, forecasting total wireless service revenue growth between 2% and 3.5%, adjusted EBITDA growth of 1% to 3%, and adjusted EPS of $4.50 to $4.70.