Frontier Communications Corporation (FTR) has announced an agreement with the Connecticut Attorney General and the Office of Consumer Counsel (OCC). The move is to support customer and community benefits expected to arise from Frontier’s proposed acquisition of AT&T, Inc.'s (T) 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.
Frontier moved a step closer toward sealing the deal after the carrier and the communication workers of American District 1 (CWA) Union agreed to a new labor contract. Frontier has agreed to extend the current collective bargaining agreement till 2018.
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. (VZ) 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 Consolidated Communications Holdings Inc. (CNSL), with a Zacks Rank #1 (Strong Buy).
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