Verizon Communications has announced two major transactions designed to ‘sharpen its strategic focus’. First up, the telco has reached a definitive agreement to sell its local wireline operations in California, Florida and Texas to Frontier Communications for approximately USD10.5 billion; the transaction will comprise USD9.9 billion in cash and USD600 million in assumed debt. In a second parallel transaction, Verizon has agreed to lease the rights to over 11,300 of its company-owned wireless towers to American Tower Corporation, which will also purchase approximately 165 Verizon towers, for a total upfront payment of approximately USD5 billion.
The wireline transaction will allow Verizon to focus on its contiguous footprint in a number of Eastern states, namely: Connecticut, Delaware, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Rhode Island, Virginia and Washington, DC. As at 31 December 2014 the sold assets encompassed 3.7 million voice connections, 2.2 million broadband customers (including approximately 1.6 million FiOS fibre-to-the-home [FTTH] users and approximately 1.2 million FiOS IPTV subscribers. Verizon will retain around 16.1 million voice connections, seven million broadband customers (including approximately 5.1 million FiOS users) and 4.5 million IPTV customers. Completion of the transaction is subject to customary closing conditions, including certain regulatory approvals. The companies expect to complete the transaction in the first half of 2016.
Meanwhile, under the terms of the wireless tower transaction, American Tower will have exclusive rights to lease and operate over 11,300 Verizon cell towers – a significant majority of the towers the company currently owns. In addition, Verizon will sell approximately 165 towers outright. Verizon will sub-lease capacity on the towers for a minimum of ten years, for USD1,900 per month per site, with annual rent increases of 2%. Going forward, Verizon will have customary renewal options that could potentially extend the full term of the sublease to 50 years.