Verizon Communications has confirmed its deal to buy Frontier Communications in a transaction valued at $20 billion.
The acquisition of Frontier will bolster the fiber business of Verizon Communications in the long-term. Verizon said the deal will increase scale with 2.2 million fiber subscribers and will extend Verizon’s network reach to 25 million premises across 31 states and Washington, D.C.
The deal is projected to generate at least $500 million in annual run-rate cost synergies. It will expand Verizon’s intelligent edge network for digital innovations like AI and IoT.
The top management of Frontier includes Nick Jeffery (Chief Executive Officer); Scott Beasley (Chief Financial Officer); Veronica Bloodworth (Chief Network Officer); Ettienne Brandt (EVP, Commercial); Vishal Dixit (EVP, Strategy & Wholesale); Alan Gardner (EVP, Chief People Officer); John Harrobin (EVP, Consumer); Erin Kurtz (EVP, Chief Communications Officer); Charlon McIntosh (EVP, Chief Customer Operations Officer); Mark Nielsen (EVP, Chief Legal & Regulatory Officer) and Melissa Pint (EVP, Chief Digital Information Officer).
Frontier has invested $4.1 billion upgrading and expanding its fiber network over approximately four years. Frontier generates more than 50 percent of its revenue from fiber products. Frontier’s 2.2 million fiber subscribers across 25 states will join Verizon’s approximately 7.4 million Fios connections in 9 states and Washington, D.C.
In addition to Frontier’s 7.2 million fiber locations, the company is committed to its plan to build out an additional 2.8 million fiber locations by the end of 2026.
Verizon Chairman and CEO Hans Vestberg said: “The acquisition of Frontier is a strategic fit. 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.”
Fiber Focus and Competition
In the second quarter of 2024, Verizon added 391,000 broadband connections, down from the 418,000 it added during the same period in 2023. This slowdown in customer acquisition suggests Verizon may be struggling in the broadband market. The company’s total broadband subscriber base stood at 11.5 million by the end of Q2 2024, up from 10.7 million at the close of 2023.
Verizon’s main competitor, AT&T, has been making strides in both fiber and 5G technology. In Q2 2024, AT&T Fiber has added 239,000 new fiber broadband customers, helping to grow its network to cover 27.8 million consumer and business locations.
AT&T’s consumer broadband revenues reached $2.7 billion, marking a 7 percent increase. The company has set a goal of expanding its fiber network to over 30 million locations by the end of 2025.
Frontier Communications: A Strategic Partner
Frontier Communications is also aggressively expanding its fiber network. The company plans to cover 1.3 million new premises in 2024, with capital expenditures projected to be between $3 billion and $3.2 billion. In Q2 2024, Frontier invested $678 million and added 388,000 new fiber passings, bringing its total to 7.2 million locations.
The company gained 92,000 fiber broadband customers in Q2, a 18.6 percent growth rate year-over-year. Frontier reported total revenues of $1.48 billion, up 2.1 percent, though it continues to face challenges, recording a net loss of $123 million for the quarter.
Consumer fiber broadband revenue reached $393 million, driven by new customer additions, while churn rates in its consumer and business segments remained relatively stable.
Consumer fiber broadband customer churn was 1.40 percent. Frontier’s consumer fiber broadband ARPU was $65.32 (up 3.5 percent).
Frontier’s Business and Wholesale fiber broadband customer churn was 1.31 percent. Frontier’s Business and Wholesale fiber broadband ARPU was $97.83 (down 2.5 percent) in the second-quarter of 2024.
Strategic Benefits
Verizon and Frontier have approximately 10 million fiber customers across 31 states and Washington D.C. with fiber networks passing over 25 million premises, and both companies expect to increase their fiber penetration.
Combined Mobile and Home Internet customers show more loyalty and less churn by approximately 50 percent for postpaid mobility, which is expected to improve Verizon’s mobility economics.
Verizon will gain access to Frontier’s quality customer base in markets complementary to Verizon’s core Northeast and Mid-Atlantic markets.
Verizon reaffirms 2024 guidance: wireless service revenue growth of 2.0 percent to 3.5 percent and capital expenditures of $17.0 billion – $17.5 billion.
Baburajan Kizhakedath
