MENA Newswire News Desk: Verizon Communications Inc. has agreed to acquire Frontier Communications Parent Inc. in a deal valued at approximately $9.6 billion, as the telecom giant seeks to strengthen its high-speed internet services. The acquisition, which includes both equity and debt, is aimed at enhancing Verizon’s fiber-optic infrastructure, a move driven by the growing demand for data consumption.
Under the terms of the agreement, Frontier shareholders will receive $38.50 per share, representing a 37% premium over Frontier’s closing price of $28.04 on Tuesday, the day before the Wall Street Journal reported the pending deal. The total value of Frontier, including debt, is estimated at $20 billion. Following the news, Frontier shares surged by 38%, but subsequently declined by 8.6% on Thursday to $35.35, still below the agreed sale price. Verizon’s stock remained relatively unchanged.
Verizon’s acquisition of Frontier comes as telecommunications companies increasingly invest in fiber networks to support growing data consumption, especially as wireless revenue growth slows. The expansion of fiber capabilities is crucial, as businesses increasingly rely on data-intensive services like artificial intelligence. Earlier this year, T-Mobile US Inc. announced a $4.9 billion investment in a joint venture with private equity firm KKR & Co. to acquire Metronet, a fiber-optic internet service provider.
Frontier’s fiber network, which covers 2.2 million customers across 25 states, will be integrated into Verizon’s existing infrastructure, which serves 7.4 million Fios subscribers in nine states and Washington, D.C. Frontier has invested $4.1 billion in recent years to upgrade and expand its fiber network, which will complement Verizon’s plan to build an additional 2.8 million fiber connections by 2026.
Verizon CEO Hans Vestberg stated that the acquisition will strengthen the company’s competitive position in multiple U.S. markets. Analysts see the move as a critical step in solidifying Verizon’s fiber broadband strategy, enabling it to leap ahead of competitors like AT&T in terms of fiber subscriber base.
The transaction has been approved by the boards of both Verizon and Frontier and is expected to close within 18 months, pending regulatory and shareholder approvals. Verizon reaffirmed its financial outlook, projecting the deal will be accretive to revenue and earnings starting in 2027, with $500 million in cost synergies by the third year post-closure.
Frontier has been under pressure from activist investor Jana Partners to improve its returns. The company reported $5.8 billion in revenue in 2023, with more than half coming from its fiber-optic products. Frontier previously filed for Chapter 11 bankruptcy in 2020 but emerged stronger in 2021, focusing on its fiber business after selling parts of its landline assets to Verizon in 2015.