US rural broadband and DTH provider Frontier Communications is reportedly set to buy US$10bn worth of wireline assets from local telecoms giant Verizon Communications.
It would be Frontier’s largest ever deal and could be announced as early as this…
US rural broadband and DTH provider Frontier Communications is reportedly set to buy US$10bn worth of wireline assets from local telecoms giant Verizon Communications.
It would be Frontier’s largest ever deal and could be announced as early as this week, reported the Wall Street Journal citing sources.
Verizon is also close to selling a package of telecoms towers for roughly US$5bn, added the report.
The telco, which was last year rumoured to have hired TAP Advisors to consider selling and leasing back tower sites, has been looking to reduce its debt mountain after buying out Vodafone from their Verizon Wireless joint venture for US$130bn.
It also recently spent US$10.4bn on acquiring 181 licences in the country’s record-breaking AWS-3 spectrum auction, behind only rival telco AT&T which spent US$18.2bn in total provisional winning bids. Affiliates of satellite broadcaster Dish Network paid the the next highest at US$9.9bn, when accounting for the discounts they have claimed for.
Frontier specialises in offering bundled triple play services to both residential and business customers in rural areas. It has been seeking to expand its landline business in recent years and, in October 2014, received approval to buy AT&T’s fixed line business in Connecticut for US$2bn. That deal also included Dish satellite TV customers in the northeastern US state that had signed up through AT&T, which is meanwhile seeking regulatory clearance to buy US DTH giant DirecTV.
FCC set for net neutrality battle
The Federal Communications Commission’s plans to reclassify ISPs as common carriers under Title II of the country’s Telecommunications Act could prompt a wave of lawsuits from telcos, according to analysts.
FCC chairman Tom Wheeler said in a statement yesterday that it seeks to ban paid prioritisation, blocking, and throttling of lawful content and services, with the rules also applying to mobile.
He added that the regulator would “modernise” Title II to preserve incentives for broadband operators to invest in their networks.
“For example, there will be no rate regulation, no tariffs, no last-mile unbundling,” he said.
According to Joseph Mastrogiovanni, an analyst at Credit Suisse, a lawsuit will depend on the language of the proposal.
“We believe there is a moderate possibility that the carriers wouldn’t challenge the proposal if it was clear that rate regulation was eliminated as a possibility now and in the future, and if the FCC included language that limited individual state oversight,” he said.
“It’s unclear from Wheeler’s op-ed how he plans to implement Title II, but exclude rate regulation. We think the most likely scenario is a court challenge by the telco carriers.”
The FCC will likely vote on the proposed order during a meeting on 26 February.
New Street Research analyst Jonathan Chaplin expects the FCC will vote 3-2 on the move.
The regulator would then be freed up to focus on AT&T’s US$48.5bn acquisition of DirectTV, and Comcast’s US$45.2bn deal for rival cableco Time Warner Cable.
“We don’t think the Title II order materially impacts the outcome of these deals,” said Chaplin.
“We remain at 66% odds of approval for [Comcast/TWC] and 85% odds of approval for AT&T / DTV.”
