Hours before the FCC shut down most of its online databases last week to accommodate IT system upgrades, the agency issued an order approving Frontier Communications’ proposed acquisition of wireline network assets held by Verizon Communications in the states of California, Texas and Florida. Announced last February, the $10.54 billion transaction encompasses switched and special access lines, fiber optic facilities, and interexchange network infrastructure controlled by Verizon in those three states. These facilities serve 3.7 million wireline voice customers and 2.2 million data service customers, including 1.6 million subscribers to the Verizon FiOS broadband service and 1.2 million viewers of Verizon’s FiOS video service. When the agreement between the companies was first signed, Verizon CEO Lowell McAdam explained that the proposed sale would permit Verizon “to focus on further penetrating the market for its FiOS business across a contiguous footprint in Eastern states.” Building upon a similar deal five years ago in which Frontier paid $8.6 billion to acquire Verizon wireline assets in 13 states, Frontier’s latest pact with Verizon, as stated by a Frontier spokesman in February, marks “a natural evolution for our company” which “will strengthen our presence in competitive suburban markets.”
Endorsing the deal, the FCC found that the transaction “is likely to result in tangible benefits for customers through improved broadband service and investment, and certain synergies and cost savings.” Dismissing concerns raised by various parties that the deal would subject Frontier to excessive financial strain, the FCC also declared that, based on its review of funding and credit records submitted by Frontier, it was “not persuaded that the transaction is unduly risky or will result in specific public interest harms.” Moreover, the FCC concluded that Frontier “is more likely to improve service quality and invest in infrastructure improvements . . . than Verizon would be absent the transaction,” as it cited Frontier’s commitment to deliver broadband services with minimum download speeds of 25 Mbps to an additional 750,000 households by 2020.
Justice Department antitrust officials have already cleared the sale, and the deal still requires approval by California and Texas state regulators before the parties may proceed to complete the transaction, which is expected to close in March 2016. As Frontier CEO Daniel McCarthy said, “we are pleased the FCC moved swiftly and smartly to approve this acquisition,” Verizon senior vice president Michael Glover told reporters, “we look forward to promptly receiving the remaining regulatory approvals in the coming months.”