Verizon customers enter Frontier today

BY GLYNIS CRAWFORD SMITH

THE HIGHLANDER

 

It may have gone over the heads of most consumers as Frontier Communications negotiated the $10.56 billion acquisition of Verizon wireline phone, Internet and TV networks in Texas, California and Florida.

However, the deal was finalized yesterday and Friday, April 1, is the day Verizon home services move into the hands of Frontier. That means, if you currently have Internet, TV or Voice service–including FiOS (Verizon's branded fiber optic network of bundled Internet access, telephone, and television service), it will be provided by Frontier Communications.

Cities in the area are not expecting changes in their franchise agreements for equipment sharing space with city infrastructure or to their own services.

“I have not received any notices from either Verizon or Frontier on any changes to our contract,” said Ken Nickel, Granite Shoals city manager. “Normally, the new owners inherit the companies contracts. 

“We have not been notified by Verizon whether a new franchise agreement will need to be executed,” said Margie Cardenas, Marble Falls finance director. “There should not be any impact on city services, nor on the services from Verizon.”

Frontier has pledged to continue to honor promotional pricing offered by Verizon through any promotional period.

Some 10,000 Verizon employees have been promised transition into Frontier.

Each customer already should have received a notice by mail, promising no change in phone numbers, rates or services. The letter does, however instruct customers who want to do business online or by mobile device to set up a Frontier ID by following instructions at MeetFrontier.com.

New Frontier Communications customers can expect bills to be sent out in April with instructions on the many payment options available to them. Bills and other communications in Spanish from Verizon, will be continued by Frontier. Customers can pay their bills by mail; automatic bank draft service; Western Union; in person at an authorized agency; or online at frontier.com. What will not continue is the ability to pay bills at Verizon Wireless locations. 

Frontier Communications has several ways for residential and business customers to contact a support team. Residential customers can call 800-921-8101 or go online frontier.com/contact-us. Business customers, account holders or representatives can call 800-921-8102 or go online to frontier. com/contact-us#/business.

In February, 2015, Frontier Communications (NASDAQ:FTR) formally announced to the realms of finance and investment, the definitive agreement with Verizon (NYSE:VZ) to acquire its wireline services to residential, commercial and wholesale customers—3.7 million voice connections, 2.2 million broadband connections, and 1.2 million FiOS® video connections. 

“The wireline operations being acquired by Frontier generated revenue of more than $5.7 billion in 2014,” read the announcement. “As a result of certain -allocated overhead costs not transferring to Frontier, or being replaced by Frontier's lower cost structure, Frontier expects costs to be reduced by $525 million in the first year after close and $700 million by year three. Frontier expects the transaction to be 35 percent accretive to free cash flow per share in year one and to improve Frontier's strong dividend payout ratio by 13 percentage points.”

Frontier stock saw an immediate uptick following an announcement, topping out at $8.38 in February last year, but returning slowly to $5.62 yesterday. Meanwhile, Verizon was trading at a five-year high of $54.04 yesterday. FTR currently pays a 7.51percent dividend and VZ currently pays a 4.17 percent dividend.

The transaction was structured as an asset purchase for tax purposes; with an estimated net present value benefit of approximately $1.9 billion to Frontier and its shareholders. Frontier Communications is an S&P 500 company and is included in the Fortune 1000 list of America’s largest corporations.

“Verizon runs a great network and that’s one of the reasons we purchased it from them,” Steven Crosby, senior vice president of government and regulatory affairs, told the San Gabriel Valley Tribune in Los Angeles County, California, this week. “About 54 percent of the network is fiber. A fiber-rich network is clearly important. They run a good business, so our chairman, CEO and board made the decision that this was a good way to augment what we currently have.”