Verizon Expands Fiber Network with Frontier Acquisition

Verizon announced on Thursday that it would acquire Frontier Communications for $20 billion, which is more than double Frontier’s market capitalization after trading the previous night

A significant consolidation in Internet communications will have repercussions for consumer Internet access and competition in the United States.

Frontier provides internet, phone, and television services. Additionally, it has collaborated with companies such as Amazon and Google to consolidate additional digital services or establish new distribution channels. However, Verizon’s primary interest in the company is its fiber operation, which spans regions Verizon does not currently serve.

Frontier, founded in Tampa, has 2.2 million subscribers in 25 states, including the lucrative market of Washington, DC. It is expanding its network and anticipates reaching 10 million households by 2026, an increase from the current 7 million. Under the leadership of CEO Hans Vestberg, Verizon has been actively expanding its Fios fiber network. The two entities collectively encompass 25 million residences.

This is a somewhat karma-driven turn of events. Frontier acquired a portion of Verizon’s legacy local exchange division for $8.5 billion in 2009. After accounting for inflation, this amounts to approximately $12.5 billion in 2024.

Vestberg stated that the acquisition of Frontier is a strategic complement. “It will capitalize on Verizon’s two decades of fiber leadership and provide an opportunity to increase our competitiveness in additional markets across the United States, thereby improving our capacity to provide premium offerings to millions of additional customers through a unified fiber network.”

Verizon’s acquisition was publicized concurrently with its reaffirmation of its fiscal year guidance, which suggests an additional rationale for the acquisition. EBITDA is anticipated to increase by 1% to 3%, while wireless revenues are anticipated to increase by only 2% to 3.5% (in comparison, they increased by over 8% in 2014). The expansion of fiber’s customer base and reach is a wager on the company’s longevity and ability to counteract those figures.