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Verizon to Sell Wireline Operations in 14 States

Verizon once again chose a strategic sale of wireline assets, this time to Frontier Communications. Clearly, this is a recognition that the future of local facilities is wireless and fiber optics. Verizon will keep some wireline assets in the more densely populated areas of the U.S., at least for a while.

On balance this is a good move for Verizon, although losing 100,000 plus FiOs served premises is a bit of a downer.

Now the fun will begin as the companies seek regulatory approval in all the affected states.

"Details of the Acquired Operations"

"The operations Frontier will acquire include all of Verizon’s local wireline operating territories in Arizona, Idaho, Illinois, Indiana, Michigan, Nevada, North Carolina, Ohio, Oregon, South Carolina, Washington, West Virginia and Wisconsin. In addition, the transaction will include a small number of Verizon’s exchanges in California, including those bordering Arizona, Nevada and Oregon.

As of year-end 2008, these operations served approximately 4.8 million local access lines; 2.2 million long-distance customers; 1.0 million high-speed data customers, including approximately 110,000 FiOS Internet customers; and 69,000 FiOS TV customers.

Approximately 11,000 Verizon company employees -- those who primarily support the local phone business that is being acquired -- will continue employment with Frontier after the merger."

The NY Times has this to say, quoting Ivan Seidenberg, CEO and John Killian, CFO.

“Capital is finite,” he said. “We felt the appropriate place to put our capital was into our FiOS footprint and our wireless footprint.”

Mr. Killian added that the company had not decided what to do about the 30 percent of its remaining home customers that are outside of areas where the company plans to offer FiOS. For now, it offers bundles that include satellite television provided by DirecTV. But if costs come down, it might install fiber to those homes, or perhaps new technology that can deliver higher Internet speeds and video over copper wires.

Verizon has been selling off many of its local phone operations outside of the population centers in the Northeast. But in a conference call with investors, Ivan G. Seidenberg, Verizon’s chief executive, said it did not expect further deals.

“This completes the picture of where we take the local business,” he said.