Frontier Communications Corp.
) announced that post-approval of its pending acquisition of
) wireline operation in Connecticut, it plans to expand the reach
of U-Verse in the region. Notably, U-Verse is a triple play
communication service providing broadband, IP telephone and IPTV
Stamford-based Frontier initially plans to extend U-Verse
service to 100,000 customers, in regions where U-Verse is currently
present as well as those which it still does not cater to. However,
the deal awaits the nod from Connecticut's Public Utilities
Regulatory Authority (PURA) and Federal Communication Commission.
The carrier also confirmed that there will be no major changes in
the U-Verse channel line that will be offered in the state.
Frontier plans to close the deal by Oct 1, 2014.
In Dec 2013, Frontier had entered into a definitive agreement
with AT&T to acquire the latter's wireline assets in
Connecticut for $2.0 billion in cash. The deal is expected to
include the sale of 900,000 voice connections in Connecticut. This
includes U-Verse Voice over IP and traditional voice services. In
addition, AT&T will also provide Frontier with approximately
415,000 broadband connections in the region, which would
incorporate 245,000 U-Verse and 70,000 DSL customers.
In addition, Frontier will also have access to AT&T's
180,000 U-Verse video subscribers. Moreover, AT&T will transfer
its 2,700 employees managing its Connecticut operations to Frontier
as the deal closes.
Recently, Frontier moved closer to sealing the deal after the
carrier and the communication workers of American District 1 (CWA)
Union agreed to a new labour contract. Frontier has agreed to
extend the current collective bargaining agreement till 2018, which
assures PURA's concern about maintaining current employment level
in the state.
Frontier also stressed that it will be easier for the company to
integrate the AT&T assets compared to the wireline assets that
the company acquired from
Verizon Communications Inc.
) in Jul 2010.
U-Verse has been a success story for AT&T as it generally
carries a higher ARPU and a relatively low churn. We believe
Frontier's decision to expand the U-Verse service will boost its
revenues through higher ARPU and subscriber additions.
Frontier currently carries a Zacks Rank #3 (Hold). Another stock
worth considering within this sector is
), with a Zacks Rank #2 (Buy).
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