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Verizon said on Thursday that it had entered into a definitive agreement to acquire Frontier, a leading fiber internet provider, for $20 billion in cash.
Frontier is a nearly 90-year-old telecommunications company that filed for bankruptcy in 2020 after taking on billions of dollars in debt. Frontier exited bankruptcy in 2021 with a fiber focus, and after years of effort, and $4.1 billion in investments, it has grown its customer base to 2.2 million households in 25 states. The company plans to add 2.8 million new locations for fiber connections by the end of 2026.
Verizon decided to buy Frontier to become more competitive in the fiber internet market. As of April 2022, AT&T Fiber and Crown Castle Fiber had 12.17% and 11.59% of the U.S. market respectively, compared to 10.74% for Verizon Fios.
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"The acquisition of Frontier is a strategic fit," said Verizon Chairman and CEO Hans Vestberg, in a statement. He added that the acquisition would help Verizon "deliver premium offerings to millions more customers across a combined fiber network."
Verizon chairman and CEO Hans Vestberg. Photo by Drew Angerer/Getty Images
Acquiring Frontier brings Verizon's fiber footprint to 10 million homes by 2026, an increase from the about 7 million Verizon has today.
Verizon expects to save at least $500 million in annual costs after the acquisition.
The transaction, which has been unanimously approved by the board of directors of both companies, is expected to close in about 18 months.
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