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Frontier Buying Verizon Assets Won't End Well For Shareholders

Frontier Communications Corp (FTR) will purchase $10 billion of Voice, broadband, and FiOS assets from Verizon (VZ) for $10.5 billion. Frontier will gain 2.8 million FiOS customers along with wireline phone services in Texas, Florida, and California. To many Frontier investors, this might seem like a good deal given the acquisitive nature in the past, but in reality, this poses many long-term problems for Frontier.

The first problem with this deal is the location of wireline phone assets. Back in 2009 Frontier bought 4.8 million phone lines in West Virginia and many smaller cities from Verizon for $8.6 billion. Most recently, Frontier paid $2 billion to acquire AT&T's wireline assets in Connecticut. Given the location of the previous deals it would have made the most sense for Frontier to acquire Verizon's Northeast assets, but it did not. It should be noted that Frontier has a large presence in Florida,… Read More …