Verizon Communications Picks Up Frontier Communications Parent, But At What Cost?

Summary:

  • Verizon Communications’ acquisition of Frontier Communications Parent will expand its fiber network and potentially generate significant synergies, including $500 million in annual cost savings.
  • Frontier Communications Parent has struggled with declining revenues and profits but shows growth in fiber broadband customers and ARPU, making it an attractive target.
  • The success of the acquisition hinges on Verizon’s ability to capture synergies, reduce interest expenses, and leverage cross-selling opportunities to enhance cash flows.
  • Despite risks, the deal is likely beneficial for Verizon, warranting a ‘buy’ rating, while Frontier’s current trading price suggests a soft ‘buy’ due to the buyout premium.

April 18, 2018 - New York City, USA. Verizon store located in Manhattan.

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Late last week, news broke that telecommunications giant Verizon Communications (NYSE:VZ) had struck a deal to acquire Frontier Communications Parent (NASDAQ:FYBR) in an all-cash transaction that will make it one of the


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