The deal triples Frontier's footprint and gives it 4.8 million new access lines, primarily in rural areas. The agreement means Verizon will spin off the assets into an entity that will merge with Frontier when the deal is completed, which is expected to be in 12 months. The deal includes $5.3 billion in common stock, and Frontier will take on about $3.3 billion in debt.
"This is a truly transformational transaction for Frontier," Frontier CEO Maggie Wilderotter said in a statement. "With more than 7 million access lines in 27 states, we will be the largest provider of voice, broadband, and video services focused on rural to smaller city markets in the United States."
For Verizon, the move is a way to focus on faster-growing segments of the telecommunications industry. Telecoms like Verizon and AT&T have seen wireline revenue steadily decline as cell phones become more prevalent, and a recent U.S. Centers for Disease Control and Prevention survey said 20% of households rely solely on cellular service.
"This transaction is part of our multiyear effort to transform our growth profile and asset base to focus on wireless, FiOS fiber-optic services, and other broadband development, and global IP," said Ivan Seidenberg, CEO of Verizon, in a statement. "All of Verizon's remaining local landline operations have high concentrations of FiOS in more densely populated markets. We believe our focus on reshaping our asset base will drive higher growth over time and improve long-term returns."
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