There was a major bit of fiber M&A yesterday of course, among what we once called incumbent telcos. Verizon has entered into a definitive agreement to acquire Frontier. The purchase will combine Verizon’s FIOS footprint with the FTTH that Frontier has been building out as well.
Of course, Verizon once sold Frontier a bunch of primarily copper assets as it slimmed down to the footprint it wanted to build fiber to. Now they are buying much of that back, with Frontier having done the work to hook some of it up. Frontier has invested some $4.1B in upgrading their footprint, and 50% of its revenue comes from fiber connections now. There’s more to go of course.
The deal adds 2.2M fiber subscribers, expanding Verizon’s reach to 25M premises across 31 states. Verizon currently has 7.4M Fios connections, and is building out to another 2.8M over the next couple of years.
The transaction is valued at $20B and will have Verizon paying cash for $38.50 per share, a 43.7% premium above Frontier’s 90-day average share price. Both boards of directors have approved the deal, but of course the bigger hurdle will be the regulators. No doubt both companies will look to stay out of politics for the next 2 months, but we’ll see if they manage.
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Categories: FTTH · ILECs, PTTs · Mergers and Acquisitions
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There’s going to be almost none (if any) overlap in their markets. My assumption is none. Logically, there would be no competitive reason to not allow the merger to go through.
Frontier’s percentage of fiber revenue is so high because like most telcos, they’ve done everything in their power to eliminate revenue from copper services for the past 20 years.
Has anyone heard anything about Stealth Communications? I’ve been hearing rumors from bankers that they could be a potential acquisition target, valued at over $20B. Curious if anyone else is hearing the same?
Harris, Yes – It was already discussed in this article: https://www.fierce-network.com/broadband/verizon-rumored-buy-frontier-its-convergence-game
20 BILLION?? 🤑🤑🤑
Harris, as far as I can tell, there’s absolutely no scenario where Stealth Communications could be sold off. The key is in the government contracts they handle. let’s just say, certain three-letter agencies are involved. Keep that in mind