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Verizon sells fixed-line business
|14 мая 2009|
Verizon Communications has agreed to sell its traditional phone business – it serves primarily rural customers in 14 states – to Frontier Communications for about $5.25bn in stock.
Verizon said the deal would enable it to focus on its faster-growing businesses and reduce exposure to local access line losses.
“This transaction is part of our multi-year effort to transform our growth profile and asset base,” said Ivan Seidenberg, Verizon’s chief executive.
The deal will turn Frontier, the Connecticut-based fixed-line operator, into the largest rural carrier in the US and increase its local access lines from 2.3m to more than 7m in 27 states.
It will position Frontier to boost DSL broadband penetration in the markets it is acquiring from about 60 per cent to more than 90 per cent. “We have a reputation as a rural broadband leader and these markets present us with a significant opportunity,” said Maggie Wilderotter, Frontier chief executive.
The deal means a further restructuring of US telecommunications, dominated by Verizon, AT&T and Sprint Nextel, and the emergence of strong second-tier carriers, including Frontier.
Under the terms of the deal, which is subject to shareholder and regulatory approval and is expected to close in about 12 months, Verizon shareholders will receive $5.25bn in Frontier common stock and Verizon will receive an additional $3.3bn in cash and debt securities. Once completed, Verizon shareholders will own about 68 per cent of the expanded Frontier.
Frontier approached Verizon about a potential transaction after last October’s acquisition of Embarq by CenturyTel, another rural phone service provider, according to a person familiar with the negotiations. Frontier had lost in the bidding for Embarq, which was spun off by Sprint following the 2005 Sprint Nextel merger, and was looking for other rural phone properties.
The deal between Frontier and Verizon came together in about a month-and-a-half. Frontier was the logical buyer because it operates in 11 of the 14 states in which the assets are located.
Verizon has divested its slower-growth or declining assets. By sloughing off the rural access lines, Verizon is setting itself up to pull in 70 per cent of its earnings before interest, taxes, depreciation and amortisation from wireless assets compared with less than 50 per cent for AT&T.
Verizon Wireless is jointly owned by Verizon and Britain’s Vodafone group and Verizon’s heavier concentration in wireless could improve its strategic prospects.
It might ultimately make it a better acquisition candidate for Vodafone, which has been put off by Verizon’s fixed-line exposure.
The deal may also prompt AT&T to consider ways to further expand its wireless business, either in the US or abroad.
The structure of the deal should make it largely tax-free to Verizon’s shareholders. Verizon will spin off the assets into a new company, which will then immediately merge into Frontier. JPMorgan and Barclays advised Verizon, while Citigroup and Evercore advised Frontier.
Источник: Financial Times