02.22.2016|Financial

Verizon continues focus on network superiority with agreement to purchase XO Communications’ fiber business

NEW YORK – In a move to continue to strengthen the foundation of America’s best networks, Verizon Communications Inc. (NYSE, Nasdaq: VZ) today announced it has signed an agreement to purchase XO Communications’ fiber-optic network business for approximately $1.8 billion.

Verizon’s ownership of XO’s fiber-based IP (Internet protocol) and Ethernet networks will help better serve enterprise and wholesale customers. In addition, acquired fiber facilities will help Verizon continue to densify its cell network.

The transaction is subject to customary regulatory approvals and is expected to close in the first half of 2017.

Verizon expects to receive several financial benefits from the transaction, including a step-up in the basis of the assets as well as operating and capital expense savings. The net present value of the operational synergies is expected to be in excess of $1.5 billion.

Separately, Verizon will simultaneously lease available XO wireless spectrum, with an option to buy XO’s entity that holds its spectrum by year-end 2018.

Citigroup acted as financial adviser and Debevoise & Plimpton LLP acted as legal adviser to Verizon.

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