Verizon To Sell Wireline Assets In 3 States To Frontier For $10.54 Bln

(RTTNews) - Verizon Communications Inc. (VZ) said Thursday that it has agreed to sell its local wireline operations serving customers in California, Florida and Texas to Frontier Communications Corp. (FTR).

Frontier will pay Verizon about $10.54 billion, including about $9.9 billion in cash, plus $600 million in assumed debt, for the business and related assets in those states.

The operations Frontier will acquire consist of all of Verizon's local wireline operating territories in California, Florida and Texas. At the end of fourth-quarter 2014, those operations served about 3.7 million voice connections and about 2.2 million high-speed data customers.

The companies are targeting completing the deal in the first half of 2016. About 11,000 Verizon company employees are expected to continue employment with Frontier after the deal.

The deal does not include the services, offerings or assets of other Verizon businesses, such as Verizon Wireless and Verizon Enterprise Solutions.

Verizon has also agreed to lease the rights to over 11,300 of its company-owned wireless towers to American Tower Corp. (AMT), which will also purchase about 165 Verizon towers, for a total upfront payment of about $5 billion. Verizon expects the deal to close by mid-2015.

The average term of the lease rights is about 28 years. As the leases expire, American Tower will have fixed-price purchase options to acquire these towers based on their anticipated fair market values at the end of the lease terms.

Verizon will sublease capacity on the towers from American Tower for a minimum of 10 years for $1,900 per month per site, with annual rent increases of 2%. Verizon will have customary renewal options that could potentially extend the full term of the sublease to 50 years.

Additionally, Verizon announced a $5 billion accelerated share-repurchase program entered into Thursday. Under the terms of the accelerated stock repurchase agreement, Verizon will repurchase $5 billion of its common stock and expects to receive an initial delivery of shares having a value of approximately $4.25 billion.