Frontier Weighs Sale of Ex-Verizon Landline AssetsBy and
Rural telecom company bought assets in $10.5 billion deal
Package includes landlines in Florida, California, Texas
Frontier Communications Corp. is working with advisers to sell assets as the debt-laden rural telecom company looks to raise new funds and fix its capital structure, according to people with knowledge of the matter.
The company is considering a sale of a package of landline assets in California, Florida and Texas that it acquired from Verizon Communications Inc. in a $10.5 billion deal just two years ago, the people said, asking not to be identified because the matter is private. The assets are likely to be sold in parts rather than as a single package, one of the people said.
Frontier shares rose as much as 12 percent in New York. The company has a market valuation of about $695 million.
While Frontier has struggled to capitalize on the value of the network property, prices have been rising in the market for fiber assets. Demand for faster internet has fueled a race for fiber-optic capacity, and that’s driving up the value of the cables that pump traffic through the internet. Frontier bought the assets for 3.7 times one measure of earnings before interest, taxes, depreciation and amortization, according to the deal announcement. The unit generated $1.04 billion in revenue in the third quarter, according to a company presentation.
A representative for Frontier declined to comment.
The Verizon properties included 3.7 million voice connections, 2.2 million broadband connections, and 1.2 million FiOS video connections, Frontier said at the time of the acquisition.
Norwalk, Connecticut-based Frontier, struggling under $18 billion of debt, last week won a reprieve from its lenders that will allow it to borrow more money and refinance part of its debt. Frontier has seen its customer base and margins shrink as rural residents abandon landlines in favor of wireless carriers.
Frontier Chief Financial Officer Perley McBride said the amendments to its debt terms were an “important part of our plan to obtain additional flexibility with our credit facilities and manage our capital structure.”
— With assistance by Brandon Kochkodin, and Jamie Rickards