Frontier Communications agreed to sell its wireline operations in Washington, Oregon, Idaho, and Montana for $1.35 billion to investment firms WaveDivision Capital, LLC (WDC) in partnership with Searchlight Capital Partners, LLC. The price is $1.352 billion in cash, subject to certain closing adjustments.
Frontier’s operations in these states serve more than 350,000 residential and commercial customers, and account for $619 million of revenue, $46 million of net income and $272 million of adjusted EBITDA for the twelve months ending March 31.
The transaction is subject to regulatory approvals and other customary closing conditions. The parties anticipate the deal will close within one year.
“The sale of these properties reduces Frontier’s debt and strengthens liquidity,” said, Frontier President/CEO Dan McCarthy. “We are pleased to have a buyer with extensive experience building and operating advanced fiber-based communications assets in these regions.” He said Frontier will work with the new owners to ensure a smooth transition for customers.
WDC, headed by broadband entrepreneur Steve Weed, is based in Kirkland, Washington, and brings technical, organizational, and management experience in building and operating residential and business next-generation fiber networks. Weed is the founder and former CEO of Wave Broadband.
Frontier will continue to operate the business and serve customers with existing products and services until the transaction closes. WDC and Searchlight have formed a new company to operate the business and honor existing customer commitments and contracts after the deal closes.
Under the terms of the transaction, Frontier will receive $1.352 billion in cash at closing subject to certain adjustments, including working capital as compared to an agreed target, and certain pension and retiree medical liabilities. Frontier has also agreed to provide certain transition services to the new ownership group following the closing.
The transaction is subject to regulatory approvals by the FCC, the Department of Justice, the Committee on Foreign Investment in the United States, applicable state regulatory agencies, and certain local video franchise authorities.
May 31, 2019