Connecticut-based independent telco Frontier Communications plans to acquire about 4.8 million access lines in rural markets from Verizon Communications for about $5.25 billion (€3.85 billion) in stock.
The deal is the biggest move toward rural telco consolidation since last fall's announcement that CenturyTel would acquire Embarq (a company Frontier was once rumored to be pursuing), and it likely will move Frontier to the head of the class among rural telcos.
The acquisition, covering 14 states, triples Frontier’s current size and makes it possibly the largest rural operator in the US (CenturyTel may end up with more total lines after buying Embarq, though some of those lines are in larger, non-rural markets).
The Wall Street Journal reports that about 11,000 Verizon workers will move to Frontier.
The WSJ also says the structure of the deal will call for Verizon shareholders to receive the Frontier stock directly, which will result in those shareholders owning at least 66% of Frontier after the deal closes. The companies aim to close the deal within 12 months.
After delays caused by financing market woes and general economic uncertainty, it looks like long-awaited rural telco consolidation is finally taking off. Just this week Windstream Communications announced a deal to buy Pennsylvania's D&E Communications in another step toward further consolidation.
