Verizon will be selling some of its local wireline operations to Frontier Communications Corporation for $10.54 billion and will also lease the rights to 11,300 of its wireless towers to American Tower Corporation for $5 billion, “designed to further sharpen its strategic focus.”
Earlier this week it was reported that Verizon was pushing through the sale of these assets in a bid to pay down debt.
The news had come in the wake of heavy AWS-3 spectrum bidding where Verizon committed to pay $10.4 billion for extra wireless frequencies nationwide.
Selling wireline operations in California, Florida and Texas to Frontier will concentrate Verizon’s wireline operations on the East Coast and it will focus on further penetrating the market for its fibre-based FiOS business across a contiguous footprint in Eastern states, it said in a statement.
The transaction includes Verizon’s FiOS internet and video customers, switched and special access lines, as well as its high-speed Internet service and long-distance voice accounts in these three states.
Around 11,000 Verizon employees will stay on with Frontier after the transaction, due to be completed in the first half of 2016 subject to conditions, including obtaining certain regulatory approvals.
In the wireless tower transaction, American Tower will have exclusive rights to lease and operate over 11,300 Verizon cell towers while Verizon will sell approximately 165 towers outright.
The average term of the lease rights is about 28 years after which American Tower will have fixed-price purchase options to acquire these towers based on their anticipated market values at the end of the lease terms.
Verizon will sublease capacity on the towers from American Tower for a minimum of 10 years for $1,900 per month per site, with annual rent increases of 2 per cent and will have customary renewal options that could potentially extend the full term of the sublease to 50 years.
Verizon will have access to additional reserve capacity on the towers for future use.