Verizon has announced an agreement to acquire Frontier Communications, an Internet service provider with approximately 3 million customers across 25 states. The all-cash transaction is valued at $20 billion.
Under the agreement, Verizon will pay $9.6 billion and assume over $10 billion in debt held by Frontier, with the deal subject to regulatory approval and a vote by Frontier shareholders. The merger is anticipated to be completed within 18 months.
Verizon will acquire Frontier for $38.50 per share in cash, reflecting a premium of 43.7% to Frontier’s 90-Day volume-weighted average share price on September 3, 2024. This transaction will see Verizon reclaim a portion of its previous network, which it sold to Frontier eight years earlier. Back in 2016, Frontier purchased Verizon’s FiOS and DSL operations in Florida, California, and Texas, a transition that was plagued by technical difficulties causing weeks of outages for tens of thousands of customers.
Frontier has faced challenges over the years, including filing for bankruptcy in April 2020. Emerging from bankruptcy in 2021, the company committed to upgrading many of its outdated copper DSL locations to fiber-to-the-home service.
Frontier’s 2.2 million fiber subscribers across 25 states will join Verizon’s approximately 7.4 million FiOS connections in nine states and Washington, D.C. Verizon and Frontier expect to increase their fiber penetration before the deal closes. Together, the combined fiber networks will pass over 25 million premises in 31 states and the District of Columbia.
Verizon cited Frontier’s recent investment in fiber, amounting to $4.1 billion over approximately four years, as making it a more attractive acquisition target. With more than 50% of its revenue now derived from fiber products, Frontier’s network is highly complementary to Verizon’s core Northeast and Mid-Atlantic markets, helping to grow the number of customers purchasing both home Internet and mobile service.
Overall, the merger reflects a strategic realignment for Verizon, reinforcing its footprint while substantially expanding its customer base across the U.S.