Significant consolidation is underway in the world of internet communications, with far-reaching consequences for competitors and consumer web access in the United States. Verizon announced on Thursday its intent to acquire Frontier Communications for a whopping $20 billion, more than double Frontier’s market capitalization at the end of trading the previous evening.
Frontier offers a range of digital services, including web, cellphone, and TV providers. Through partnerships with companies such as and , it has expanded its offerings by bundling additional digital services or exploring novel distribution channels. Verizon’s fascination lies in its fiber business, particularly its expansion into areas currently underserved by the company.
Currently operating primarily from Tampa, Frontier boasts a substantial customer base of approximately 2.2 million prospects across 25 states, including the lucrative Washington, D.C. market. By building out its community, the organization aims to extend its reach to touch 10 million homes by 2026, a significant increase from its current 7 million households. Verizon is digging deep into its telecommunications heritage under the leadership of CEO Hans Vestberg, with a focus on expanding its personal Fios fiber network. Mixed, the company covers a portfolio of approximately 25 million homes.
What a remarkable twist of fate! In 2009, Frontier Communications acquired several of Verizon’s legacy enterprise businesses for $8.5 billion. Adjusted for inflation, that’s approximately $12.5 billion in 2024 dollars.
“The acquisition of Frontier marks a strategic alignment,” said Vestberg in a press statement. This statement will construct upon Verizon’s 20-year history of leadership in fiber management, providing an opportunity to accelerate growth in new markets across America and enhance its ability to deliver premium services to tens of millions more customers through a combined fiber network.
When Verizon reaffirmed its guidance for the year alongside the announcement of the deal, this suggests another underlying reason for the acquisition. Wi-Fi revenue growth is expected to be modest, rising between 2% and 3.5%, a pace similar to that seen in 2014 when it grew more than 8%. Meanwhile, EBITDA is forecasted to increase by around 1% to 3%. By pursuing additional opportunities and realizing growth, investors are effectively betting on the long-term sustainability and potential of fibre-based ventures to surpass these projections.
