Citing unnamed sources, Bloomberg is reporting that Frontier is considering a sale of landline assets in California, Florida and Texas that the company acquired from Verizon. A Frontier sale of the Verizon lines would appear to be a rather desperate act aimed at improving the company’s capital structure.
Why a Frontier Sale of Verizon Lines?
When Frontier purchased the Verizon lines in the three states for $10.5 billion two years ago, the deal appeared to be a good one for Frontier – and it probably was. More than half of the lines in those properties had been upgraded to fiber-to-the-home, making them more competitive with cable companies, who have seen big broadband share gains in markets where telcos haven’t upgraded their infrastructure and can offer only relatively low broadband speeds.
The problem, according to Bloomberg, is that Frontier’s debt level versus EBIDTA has been rising – at least in part because the company’s landline revenue has been falling for five straight quarters. As we reported in November, some financial analysts believe the company could face bankruptcy.
A key concern on the part of those analysts is that Frontier is too reliant on its residential business. The purchase from Verizon did not include Verizon’s enterprise business in the three states.
As residential properties go, however, the three Verizon states would appear to be far more valuable than other Frontier properties – and apparently that is the reason Frontier may be considering selling those lines, rather than other holdings. Bloomberg noted that prices for fiber assets such as those in the former Verizon territories have been rising.
As a Chicago resident, I can’t help likening the situation to former Mayor Daley’s sale of the city’s parking meters to an outside firm – a stopgap measure that brought in some badly needed revenue but failed to address fundamental organizational problems and, in fact, may have made those problems worse in the long run.
It seems like there ought to be a better option for Frontier. I wonder if any readers have any ideas on that.
6 thoughts on “Rumored Frontier Sale of Verizon Lines: A Desperate Act?”
Perhaps it's not surprising that readers didn't weigh in on this. If there was an easy fix, Frontier would have thought of it by now.
POT…Land Lines have gone the way of the Dinosaur……Dead. If these telecommunication companies want to stay in business, they "Must" go the way of Fiber Optics. I've been installing/constructing aerial/UG/OSP-ISP networking systems since 1981. Fiber is not new, but it seems companies today look at the technology as being to expensive. What is worst…expensive or no customers. Microman: just saying, if you really want to give quality service at a fair price to the subscriber, using the latest updated technological methods, then it's time to clean house and let those at the top move into the 21st Century.
In a power outage, POTS will still work. The fiber network is only as good as the back-up it's connected to. For medical reasons I need a POTS.
Wrong Judy. POTS lines only travel from your structure (home or office) as copper twisted pair to the local street node where they are connected to a 64k analog to digital converter card. That card and the others in that node are connected to a fiber optic network. That node requires electricity to work and that is only as good as the backup its connect to, as you say.
Which every central office has battery and generator backups, which are regularly tested and maintained.
I don't know what a fix would be, but something needs to be done. I have had more outages just this year with Frontier, plus outages last year, than I had in nine years with Verizon. I live in the country and my cell phone service is unreliable so I need my landline as I am elderly and mobility impaired. Right now, my landline has been out for over 24 hours and all they will say is that is an outage in our area. I'm really fed up with them.