Verizon divests wireline business in 14 states

Verizon Communications Inc. today announced that Frontier Communications will acquire its local wireline operations that serve rural residential and small-business customers in 14 states.┬á According to Verizon, the move will further accelerate the companyÔÇÖs focus on wireless, broadband and global IP, and is expected to strengthen Frontier's position as a premier rural communications provider and return a total value of $8.6 billion to Verizon and its shareholders.┬á The operations Frontier will acquire include all of Verizon's local wireline operating territories in Arizona, Idaho, Illinois, Indiana, Michigan, Nevada, North Carolina, Ohio, Oregon, South Carolina, Washington, West Virginia and Wisconsin. In addition, the transaction will include a small number of Verizon's exchanges in California, including those bordering Arizona, Nevada and Oregon.┬á Maggie Wilderotter, Frontier's chairman and chief executive officer said, "This is a truly transformational transaction for Frontier. With more than seven million access lines in 27 states, we will be the largest provider of voice, broadband and video services focused on rural to smaller city markets in the United States. We know that broadband is a catalyst for a healthy local economy and job growth."┬á Verizon shareholders will receive approximately $5.3 billion of Frontier common stock in the merger, subject to a collar mechanism and certain other possible closing adjustments provided for in the merger agreement. ┬á Verizon shareholders will own approximately 68 percent of the new company, and Frontier shareholders will own approximately 32 percent, with Verizon shareholders receiving one share of Frontier stock for approximately every 4.2 shares of Verizon stock held as of the record date.┬á Ivan Seidenberg, chairman and chief executive officer of Verizon said, "Longer term, this transaction is part of our multiyear effort to transform our growth profile and asset base to focus on wireless, FiOS fiber-optic services and other broadband development, and global IP. All of Verizon's remaining local landline operations have high concentrations of FiOS in more densely populated markets. We believe our focus on reshaping our asset base will drive higher growth over time and improve long-term returns."┬á Approximately 11,000 Verizon company employees will continue employment with Frontier. Both companies have vowed to provide a smooth transition for all employees as well as honor the union labor agreements in the 14 states, work constructively with union leaders.┬á┬á "We expect that this transaction will benefit customers, employees and shareholders. Verizon and Frontier will work to ensure that the employees in these states, who have performed outstanding work for our customers for many years, will have a smooth transition of their employment to Frontier," added Seidenberg.