Verizon is moving out of the phone-line business.
The company has reached a deal to sell 4.8 million rural lines to Frontier Communications for $5.25 billion in stock, so it can focus on wireless and broadband services.
Included are access lines and all of Arizona, Idaho, Illinois, Indiana, Michigan, Nevada, North Carolina, Ohio, Oregon, South Carolina, Washington, West Virginia, Wisconsin and parts of California.
The deal gets Verizon out of a declining business and makes Frontier the largest rural-only service provider in the country. It also triples the size of Frontier, which says it will expand its high-speed business and bring broadband to its new customers. Currently, only 60 percent of the lines in the 14 states have high-speed internet access.
Frontier will buy the Verizon assets for $5.25 billion in common stock, and Frontier will assume about $3.3 billion in debt. Frontier said the deal will boost earnings and provide $500 million in annual savings.
The deal is expected to close within a year.
Maggie Wilderotter, Frontier’s chairman and chief executive, said in a statement, "This is a truly transformational transaction for Frontier. With more than 7 million access lines in 27 states, we will be the largest provider of voice, broadband and video services focused on rural to smaller city markets in the United States."
Wilderotter said the company is "confident that we can dramatically accelerate the penetration of broadband in these new markets. "