State regulators in California, Nevada and South Carolina this week approved the acquisition of the local wireline operations of Verizon Communications Inc. (NYSE: VZ) serving residential and small-business customers in all or parts of those states by Frontier Communications Corporation (NYSE: FTR).
These state regulatory approvals follow an Oct. 27 announcement by Frontier that its shareowners have approved the transaction, which will result in Frontier owning Verizon's wireline operations in all or parts of 14 states.
At the federal level, the Federal Trade Commission and the U.S. Department of Justice granted the parties' request for early termination of the waiting period required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
The Public Utilities Commission of Nevada and the Public Service Commission of South Carolina both unanimously approved the transaction on Wednesday (Oct. 28). Unanimous approval by the California Public Utilities Commission came Thursday (Oct. 29).
"Regulators in California, Nevada and South Carolina have acted in the best interest of consumers in approving the acquisition," said Timothy McCallion, president of Verizon's West region. "This transaction will further each company's strategic focus, and it holds numerous benefits, including increased broadband availability, for consumers and small businesses in the states whose operations are being acquired by Frontier.
"We believe that other state regulators and the Federal Communications Commission will agree, as they complete their reviews over the next few months," said McCallion.
On May 13, Verizon announced plans to divest its local wireline operations serving residential and small-business customers in predominantly rural and small to medium-sized areas in 14 states, and that Frontier would acquire these operations.
The operations Frontier will acquire include all of Verizon's local wireline operating territories in Arizona, Idaho, Illinois, Indiana, Michigan, Nevada, North Carolina, Ohio, Oregon, South Carolina, Washington, West Virginia and Wisconsin. In addition, the transaction will include a small number of Verizon's exchanges in California, including those bordering Arizona, Nevada and Oregon.
The transaction is expected to strengthen Frontier's position as a communications and broadband provider in rural and small to medium-sized markets as Verizon continues to transform its growth profile and asset base around the fastest-growing parts of its business - wireless, fiber-based wireline (FiOS) and global IP (Internet protocol) networks.
Frontier, based in Stamford, Conn., has a highly successful track record of acquiring, operating and investing in rural communications properties, including wireline assets purchased from Verizon between 1993 and 2000. Frontier had approximately 2.3 million access lines in 24 states as of Dec. 31, 2008, and provides an array of services, including local and long-distance voice, broadband data and video.
As of year-end 2008, the Verizon operations served approximately 4.8 million local access lines; 2.2 million long-distance customers; 1.0 million high-speed data customers, including approximately 110,000 FiOS Internet customers; and 69,000 FiOS TV customers.
The Federal Communications Commission and state regulators in Arizona, Illinois, Ohio, Oregon, Washington state and West Virginia also must approve the transaction. In addition, Frontier has received cable television franchise approval from 10 of the 41 communities the company will serve in Oregon and Washington state.
Verizon Communications Inc. (NYSE:VZ), headquartered in New York, is a global leader in delivering broadband and other wireless and wireline communications services to mass market, business, government and wholesale customers. Verizon Wireless operates America's most reliable wireless network, serving more than 89 million customers nationwide. Verizon also provides converged communications, information and entertainment services over America's most advanced fiber-optic network, and delivers innovative, seamless business solutions to customers around the world. A Dow 30 company, Verizon employs a diverse workforce of more than 230,000 and last year generated consolidated revenues of more than $97 billion. For more information, visit www.verizon.com.
NOTE: This news release contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The following important factors could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: the effects of adverse conditions in the U.S. and international economies; the effects of competition in our markets; materially adverse changes in labor matters, including workforce levels and labor negotiations, and any resulting financial and/or operational impact, in the markets served by us or by companies in which we have substantial investments; the effect of material changes in available technology; any disruption of our suppliers' provisioning of critical products or services; significant increases in benefit plan costs or lower investment returns on plan assets; the impact of natural or man-made disasters or existing or future litigation and any resulting financial impact not covered by insurance; technology substitution; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations or adverse conditions in the credit markets impacting the cost, including interest rates, and/or availability of financing; any changes in the regulatory environments in which we operate, including any loss of or inability to renew wireless licenses, and the final results of federal and state regulatory proceedings and judicial review of those results; the timing, scope and financial impact of our deployment of fiber-to-the-premises broadband technology; changes in our accounting assumptions that regulatory agencies, including the SEC, may require or that result from changes in the accounting rules or their application, which could result in an impact on earnings; our ability to successfully integrate Alltel Corporation into Verizon Wireless' business and achieve anticipated benefits of the acquisition; and the inability to implement our business strategies.