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Verizon is buying Frontier Communications in a $20 billion deal to strengthen its fibre network, with the deal representing significant growth for Verizon’s fibre business.
Verizon, announcing the purchase on Thursday, stated that the purchase, which adds Frontier’s 2.2 million subscribers in 25 states to Verizon’s 7.4 million in nine states and Washington D.C., will shore up its developments in artificial intelligence and connected devices.
Frontier, has largely concentrated on its fibre network capabilities in recent years, investing upwards of $4bn in its network over the last half-decade. Verizon, based in New York City, will pay $38.50 for each Frontier share. The deal is expected to close in about 18 months. It still needs approval from Frontier shareholders, as reported by AP.
“The acquisition of Frontier is a strategic fit,” Verizon CEO Hans Vestberg said, as it provided an opportunity to be more competitive in additional markets. The deal, once passed, will represent something of a re-merger, with Verizon having previously sold its TV and internet business in Texas, California and Florida to Frontier in a $10.54bn deal back in 2016.
However, as reported by Reuters, there has been some scepticism from analysts towards the deal with Verizon’s fibre network covering less than 10% of the U.S. and the acquisition will give it roughly another 3%, while AT&T covers less than 15%, MoffettNathanson analyst Craig Moffett said.
“You would describe it as going from small to a little bit less small, but that’s about the best you could say about it,” Moffett said. “There’s simply no conceivable path where they can reach meaningful scale with fibre.”
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