Verizon Buying Dallas-Based Frontier Communications in $20B Deal

Telecommunications giant Verizon is buying Dallas-based Frontier Communications in a $20 billion deal, a move that increases the competition with another North Texas tech firm, AT&T.

Frontier Communications, which moved headquarters to Dallas a year ago from Connecticut, will bring 2.2 million fiber broadband subscribers in 25 states to Verizon’s base of 7.4 million fiber users.

The all-cash deal is expected to close within about 18 months, pending regulatory approval, the companies said Thursday. The deal includes Frontier’s $11 billion in debt, and Verizon is expected to pay about $9.6 billion, giving Frontier shareholders about $38.50 a share. The deal still needs to be approved by Frontier shareholders.

“The acquisition of Frontier is a strategic fit,” Verizon chairman and CEO Hans Vestberg said in a statement. “It will build on Verizon’s two decades of leadership at the forefront of fiber and is an opportunity to become more competitive in more markets throughout the United States, enhancing our ability to deliver premium offerings to millions more customers across a combined fiber network.”

Frontier received about $7 million in incentives to move its corporate offices to Dallas in 2023 with the hopes of growing to 3,000 local workers. Those tax rebates were dependent on Frontier maintaining a certain number of high-paying jobs in the area. It’s unclear yet what will happen with Frontier’s Dallas office, although Verizon does have a major office footprint in Irving and is working on an expansion that could triple its size.

Verizon and Frontier said the merger will save the combined companies about $500 million a year in costs.

Verizon is paying a heavy premium for Frontier, which had a market capitalization value of just over $7 billion to start the week. It’s a major turnaround for Frontier, which just four years agofiled for bankruptcy with $10 billion in debt. The company still has $11.2 billion in long-term debt, but now has a deep-pocketed buyer that can service the debt and expand Frontier’s footprint.

Frontier had revenue of $5.75 billion in 2023 after adding 318,000 new fiber broadband customers during the year. Net income was $29 million.

To compare, Dallas-based AT&T had 8.8 million fiber broadband customers and 71.9 million wireless customers in the second quarter, the company reported. New York-based Verizon had 112.4 million wireless subscribers in the second quarter.

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