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AT&T selling Connecticut wireline operations for $2 billion
Updated 4:12 am, Wednesday, December 18, 2013 (AP)
DALLAS (AP) — AT&T has agreed to sell its Connecticut wireline operations to Frontier Communications Corp. for $2 billion as it continues its transition to unwired operations and a cloud network.
Shares of both companies rose in Tuesday premarket trading.
The deal includes wireline network assets and consumer, business and wholesale customer relationships. Frontier said that it will also acquire AT&T's U-verse video and satellite TV customers in Connecticut.
AT&T will receive the $2 billion in cash for its subsidiaries The Southern New England Telephone Co. and SNET America Inc. About 2,700 wireline workers that support AT&T's Connecticut operations will transfer to Frontier when the transaction closes. Frontier currently has more than 200 employees at its headquarters in Stamford, Conn.
The deal gives Frontier the ability to provide communications service to Connecticut customers. It will operate in 28 states once the transaction is complete.
AT&T Inc. said Tuesday that it is still committed to having a significant presence in Connecticut. The company said that the operations it is selling comprise about $1.2 billion of its annual revenue, or less than 1 percent of its total annual revenue as of this year. AT&T said that the deal won't impact its 2013 financial results.
The transaction is subject to review by the U.S. Department of Justice, the Federal Communications Commission and the Connecticut Public Utilities Regulatory Authority and other state regulatory authorities. It is expected to close in the second half of 2014.
Frontier's stock jumped 73 cents, or 16.6 percent, to $5.13 in premarket trading while shares of AT&T added 13 cents to $34.28.
Frontier To Buy AT&T’s Connecticut Wireline Business For $2B
Frontier To Add 415,000 Broadband, 900,000 Voice, and 180,000 Video Residential Subs From AT&T
By: Jeff Baumgartner Dec 17 2013 - 08:02am
Frontier has struck a $2 billion all-cash deal to acquire AT&T’s wireline business and statewide fiber network serving resident, commercial and wholesale customers in Connecticut.
Frontier will also acquire AT&T’s U-verse video and satellite TV customers in the state, estimating that it’s poised to acquire 415,000 broadband customers (including 245,000 U-verse high-speed Internet subs and 170,000 DSL customers), 900,000 voice connections, and 180,000 video residential connections of AT&T's in Connecticut.
Frontier said the purchase will give it greater scale and help it to realize cost synergies and savings of $200 million annually once it completes the integration.
AT&T said sales proceeds will, in part, be fed to Project VIP, an all-IP initiative that intends to expand the telco’s 4G LTE network to 300 million people across the U.S. and to expand the reach of its U-verse network in its remaining 21-state wireline service area.
AT&T added that the deal will not affect its 2013 financial results, noting that the divested operations represent about $1.2 billion in annual revenues, or less than 1% of AT&T’s total annual revenues. It is evaluating the impact of the sale on its Project VIP projections, “but does not expect significant changes.”
Frontier, which will add about 2,700 employees via the transaction, said it expects to close the deal in the second half of 2014. Once folded in, Frontier, which employs more than 200 workers at its headquarters in Stamford, Conn., will operate in 28 states. Frontier currently has about 13,900 employees.
"We are excited to be acquiring AT&T's wireline operating company in Connecticut, where our company has been headquartered since 1946. This is a great opportunity to bring to Connecticut Frontier's portfolio of products and services, such as Frontier Secure, our industry leading digital security offering that gives customers top-rated online computer protection and premium technical support. It also allows us to introduce our local engagement management model to Connecticut in which Frontier employees provide high-quality service to their friends and neighbors and become actively involved in their communities,” said Frontier chairman and CEO Maggie Wilderotter, in a statement.
“AT&T's Connecticut business is substantial, well-defined and covers nearly the entire state. Based upon our track record, we are extremely confident that we will leverage this opportunity to deliver an excellent customer experience and shareholder value,” added Frontier president and COO Dan McCarthy.
“Frontier has proven both its ability to execute sizeable transactions and a commitment to the communications needs of urban, suburban and rural markets,” said AT&T chairman and CEO Randall Stephenson, in a release.
J.P. Morgan acted as the financial advisor to Frontier. Lazard acted as the financial advisor to the independent members of the Board of Directors of Frontier. Skadden, Arps, Slate, Meagher & Flom LLP and Kilpatrick Townsend & Stockton acted as legal advisors to Frontier.