There are significant changes happening in the realm of internet communications, which will impact competition and consumer internet access in the United States. Verizon made a significant announcement on Thursday, revealing its acquisition of Frontier Communications for a staggering $20 billion. This acquisition more than doubled Frontier’s market cap from the previous day’s closing trade.
Frontier provides a range of services, including internet, phone, and TV. Over the years, it has formed partnerships with renowned companies such as Google and Amazon to offer bundled digital services and explore innovative distribution channels. Verizon is particularly interested in the company’s fibre business and its capacity to reach areas that it does not currently serve.
With its headquarters in Tampa, Frontier has an impressive customer base of 2.2 million spread across 25 states, including the highly sought-after market of Washington, DC. The company is expanding its network and aims to reach 10 million households by 2026, which is an increase from the current 7 million. Verizon, under the leadership of CEO Hans Vestberg, has been diligently focused on expanding its Fios fibre network, staying true to its telecom roots. Together, the duo reaches an impressive 25 million households.
Impact on communications from Verizon’s purchase of Frontier
This turn of events has a certain sense of karma to it. In 2009, Frontier purchased a portion of Verizon’s legacy local exchange business for a staggering $8.5 billion. In 2024 dollars, that would amount to approximately $12.5 billion when adjusted for inflation.
“The acquisition of Frontier aligns strategically,” stated Vestberg. With Verizon’s extensive experience in fibre technology, this new initiative will further solidify their position as an industry leader. By expanding their reach to more markets across the United States, Verizon aims to enhance their competitive edge and provide premium services to a larger customer base through their combined fibre network.
Verizon restated its guidance for the year while also announcing the acquisition, which highlights another motive behind the acquisition. We project modest growth in wireless revenues, ranging from 2% to 3.5%. In comparison, they experienced a more significant growth of over 8% in 2014. Similarly, we anticipate a moderate increase of 1% to 3% in EBITDA. Expanding the customer base and increasing reach is a strategic move that relies on the enduring strength of fibre technology to counterbalance those statistics.
