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Verizon has bought the internet service provider Frontier for $20 billion with an aim to expand its fiber broadband access across the US.
The all-cash acquisition gives Verizon access to 2.2 million more subscribers for its Fios fiber internet service. It also promises to expand the company’s edge network for businesses.
Verizon claimed the buyout would provide “more choice” to Frontier subscribers. It would also create a “market-leading” network that would continue expanding before the deal closes, and potentially help the smaller ISP’s network reach more households.
The purchase has been approved by both companies’ boards of directors. It’s expected to close in roughly 18 months pending approval, which isn’t surprising for large-scale telecom mergers.
The two companies are coming full circle with this proposed merger. Verizon sold some of its landline phone assets to Frontier in 2015. Mounting debt led Frontier to declare bankruptcy in 2020, but it emerged from the reorganization to concentrate on fiber internet service.
Whether or not regulators approve the union isn’t clear. Frontier is considerably smaller and wouldn’t face as much scrutiny as some past mergers, such as AT&T’s failed bid for T-Mobile and T-Mobile’s successful purchase of Sprint. All the same, this would represent a communications giant acquiring a provider rather than building a separate network.
The current US government has also closely scrutinized Big Tech, including mergers. The Federal Communications Commission (FCC) in particular is concerned about large carriers holding monopolies or duopolies that hurt competition. People in Frontier’s service areas wouldn’t get more choices in that respect.
Regardless of the issues, there’s pressure on Verizon to act. It has to compete against the likes of AT&T, Google, and Sonic in the fiber optic realm. There’s also competition from cable, 5G fixed wireless (such as T-Mobile’s) and even satellite broadband from services like SpaceX’s Starlink. Verizon risks missing out on customers if they sign up for rivals before the company can enter a given market.
