Verizon to Buy Frontier for $9.6 Billion in Broadband Push

(Bloomberg) — Verizon Communications Inc. agreed to buy rival telecommunications operator Frontier Communications Parent Inc. for about $9.59 billion as the New York phone giant looks to expand its high-speed internet business.

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Frontier’s investors will get $38.50 a share, a 37% premium to the $28.04 closing price on Tuesday, the day before news of a pending deal came out, Verizon said in a statement on Thursday. The transaction values the Dallas-based company at $20 billion including debt.

Frontier, which emerged from bankruptcy in 2021, bills itself as the “largest pure-play fiber internet company in the US.” Telecommunications companies like Verizon are bulking up on fiber assets to add capacity for customers’ surging data use. The flow of data is expected to grow even further as more companies adopt artificial intelligence. In July, T-Mobile US Inc. said it would invest $4.9 billion in a joint venture with private equity firm KKR & Co. to buy fiber-optic internet service provider Metronet.

Verizon Chief Executive Officer Hans Vestberg said the takeover will allow the company to accelerate its delivery of broadband services and “become more competitive in more markets” in the US.

Frontier shares had surged 38% on Wednesday after the Wall Street Journal first reported that the companies were in talks for a deal. They were down 9.5% in premarket trading on Thursday at $35.01, below the sale price. Verizon was up 0.8% on Thursday.

The boards of Verizon and Frontier have approved the deal, which is expected to close in about 18 months if shareholders and regulators agree to it. Verizon also reaffirmed its full-year guidance in the statement.

Frontier initiated an internal review of its business earlier this year. The company has faced pressure from activist investor Jana Partners to improve its returns. It reported sales of $5.8 billion in 2023, with about 52% of total revenue from activities related to its fiber-optic products.

In 2015, Verizon sold parts of its landline phone business in California, Florida and Texas to Frontier for $10.54 billion.

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