Verizon Communications struck a pair of high profile deals last Thursday that could help offset the $10.4 billion pledged by Verizon Wireless for its winnings in the recently-concluded AWS-3 auction. In the first of two transactions, Verizon agreed to sell its wireline telephone and Internet operations in the states of California, Florida and Texas to Frontier Communications Corp. for $10.54 billion. At the same time, Verizon confirmed plans to convey exclusive lease and operating rights to 11,300 communications towers to American Tower Corp. (ATC) in a $5 billion deal that also includes the sale of 165 towers to ATC.
The agreement with Frontier encompasses 3.7 million wireline voice customers and 2.2 million data service customers that include 1.6 million subscribers to the Verizon FiOS broadband service and 1.2 million viewers of the Verizon FiOS video service. An official of Frontier, which paid $8.6 billion in 2010 to acquire Verizon wireline assets in 13 states, commented that the deal “marks a natural evolution for our company” and “will strengthen our presence in competitive suburban markets.” On behalf of Verizon, company CEO Lowell McAdam explained that the sale will permit his company “to focus on further penetrating the market for its FiOS business across a contiguous footprint in Eastern states.”
Meanwhile, Verizon’s pact with ATC (which would bring ATC’s total tower count to more than 100,000) covers lease rights in which the average term is 28 years. ATC will acquire the option to buy the towers as the leases expire, and Verizon will sublease tower capacity from ATC for a minimum period of ten years. Observing, “demand for mobile broadband by U.S. consumers is expanding dramatically,” ATC CEO Jim Taiclet predicted that, “by aggressively marketing these relatively under-utilized towers to additional tenants, we will enable faster deployment of this spectrum, accelerating the expansion of broadband coverage throughout the U.S.” In remarks to reporters, McAdam proclaimed that both deals “will further strengthen Verizon’s focus on extending our industry leadership position in our core markets and return significant value to our shareholders.”