Verizon Communications agreed to sell around a quarter of its telephone and internet operations in two separate deals with a joint value of $15.6 billion, as the company focuses on its wireless business.
The company announced on Thursday it will sell its local wireline phone operations in California, Florida and Texas to Frontier Communications in a $10.54-billion deal, including $9.9 billion in cash and assumed debt. After the deal is closed Verizon would have landline operations in nine East Coast states and Washington, DC.
The assets being sold service around 3.7 million voice connections, 2.2 million broadband customers and 1.2 million FiOS video subscribers.
Verizon spent over $22 billion and 10 years in constructing the fiber-optic communications network that the FiOS service utilizes to deliver internet access, telephone, and television services.
Verizon said that it would provide “smooth transition” for the 11 000 workers projected to continue employment with Frontier.
The deal also significantly speeds up the shift that Verizon has undertaken to focus on its wireless business, which already makes more than half of its revenue. The wireless segment is expected to grow rapidly during the next few years as more and more people access the Web via a tablet or a smartphone.
Verizon also agreed to sell around 165 cell towers to American Tower, additionally the company will have the rights to lease and operate 11 300 towers.
The deal is valued at around $5 billion in cash and represents a significant majority of Verizons wireless towers. Additionally, Verizon will lease space on the towers for a minimum of ten years for $1 900 per month per tower, with annual rent increases of 2%. The transaction with American Tower is expected to close by mid-2015.
Verizon also announced it will buyback around $5 billion worth of its own shares.
“These transactions will further strengthen Verizon’s focus on extending our industry leadership position in our core markets and return significant value to our shareholders,” said Chief Executive Lowell McAdam.
Verizon gained 0.13% on Thursday and closed at $47.86 in New York. On Friday the stock edged up 1.71% to $48.68 at 15:42 GMT, marking a one-year increase of 4.26%. The company is valued at $198.86 billion.
According to the Financial Times, the 27 analysts offering 12-month price targets for Verizon have a median target of $52.00, with a high estimate of $57.00 and a low estimate of $41.00. The median estimate represents a 8.65% increase from the last closing price.
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