Verizon CEO: $20B Acquisition Of Frontier Makes Us ‘More Competitive,’ Adds $500M In Cost Synergies

[‘Frontier] will build on Verizon’s two decades of leadership at the forefront of fiber and is an opportunity to become more competitive in more markets throughout the United States, enhancing our ability to deliver premium offerings to millions more customers across a combined fiber network,’ says Verizon CEO Hans Vestberg.

Verizon is acquiring Frontier Communications in an all-cash deal valued at $20 billion with the ultimate goal of winning more telecommunications market share versus its largest competitors in America such as AT&T.

Verizon CEO Hans Vestberg said the acquisition will shake up the telecom industry as Frontier will boost Verizon’s ability to deliver premium offerings to millions of new customers.

“The acquisition of Frontier is a strategic fit,” said Vestberg Thursday in a statement. “It will build on Verizon’s two decades of leadership at the forefront of fiber and is an opportunity to become more competitive in more markets throughout the United States, enhancing our ability to deliver premium offerings to millions more customers across a combined fiber network.”

Dallas-based Frontier has 2.2 million fiber subscribers in America that will join Verizon’s massive 7.4 million Fios connections.

Verizon’s fiber network is mostly located in the Northeast and mid-Atlantic regions of America, while Frontier’s coverage region is mainly in the Midwest, California and Texas.

$500 Million Cost Synergies

Basking Ridge, N.J.-based Verizon said it expects to realize at least $500 million in run-rate cost synergies by year three after the deal closes due to the benefits of increased scale and distribution and network integration.

The merger will help Verizon compete better against the largest telecommunications providers in the world, including AT&T, by enabling it to provide more premium broadband services.

“Connectivity is essential in nearly every part of our lives and work, and no one delivers better than Verizon,” said Verizon’s CEO. “Verizon offers more choice, flexibility and value, and we continuously look for ways to provide the best product and network experience to our customers as we bolster our position as the provider of choice.”

Verizon-Frontier Acquisition Details

The deal is expected to close in approximately 18 months.

Verizon has offered $38.50 per share, a premium of 44 percent compared with Frontier’s closing price on Sept 3.

As of June 30, Frontier had total debt of over $11 billion.

In 2016, Frontier paid $10.5 billion for Verizon assets that included TV, landline phone, broadband internet businesses and the fiber-based Fios network in California, Texas and Florida.

Frontier filed for Chapter 11 bankruptcy in 2020 to reduce its debt by more than $10 billion and provide "significant financial flexibility" to support continued investment in its long-term growth plans.

Verizon’s Merger Plan For Frontier

The merger will integrate Frontier’s fiber network into Verizon's portfolio of fiber and wireless assets, including its Fios offerings.

Verizon’s acquisition will significantly expand its fiber footprint across the nation, accelerating the company’s delivery of premium mobility and broadband services to current and new customers.

Frontier President and CEO Nick Jeffery said merging with Verizon shows how important its fiber network and customer base is.

“Today’s announcement is recognition of our progress building a best-in-class fiber network and delivering reliable, high-speed broadband to millions of customers across the country. It’s also a vote of confidence for the future of fiber,” said Jeffery in a statement.