One of the most common questions in the telecom industry is whether Verizon, a leading provider with over 120 million wireless subscribers and 7 million Fios customers, owns Frontier Communications. The two companies have a long and intertwined history, but the current answer is no – Verizon does not own Frontier in 2023. However, to fully understand their relationship, we need to dive into the details of past deals, current operations, and the future outlook for these telecom giants.
In this comprehensive guide, we‘ll cover everything you need to know about the Verizon-Frontier connection, including:
- The $10.54 billion sale of Verizon FiOS networks to Frontier in 2016
- Why Frontier went through bankruptcy and how it‘s restructuring
- Similarities and differences between Verizon and Frontier services
- Frontier‘s struggles with service quality and customer satisfaction
- The future of Verizon and Frontier as separate telecom competitors
By the end, you‘ll have a clear understanding of where things stand between these two major providers. Let‘s get started!
Verizon‘s Massive $10.54 Billion Sale to Frontier
The headline-grabbing deal happened in April 2016. Verizon announced it was selling landline, broadband and TV operations in California, Texas and Florida to Frontier Communications for $10.54 billion. This represented a massive transfer of infrastructure and customers in some of the most populous states.
Specifically, Verizon sold to Frontier:
- 3.3 million voice connections
- 2.1 million broadband connections
- 1.2 million FiOS TV video subscribers
The networks sold were the fiber-optic FiOS systems that Verizon had spent over $15 billion building out in those three states between 2004-2009. FiOS is Verizon‘s bundled Internet access, telephone, and television service that operates over a fiber-optic communications network using passive optical network technology.
For Frontier, the 2016 deal was transformative. It nearly doubled the company‘s size from 3.5 million to 6.6 million total customers and gave it a presence in three of the five largest states by population. The company took on $10 billion in additional debt to finance the acquisition, paying Verizon $9.9 billion in cash along with $600 million in assumed debt.
However, this gamble would soon put Frontier in a precarious financial position. The additional debt burden, along with difficulties in integrating the new networks and improving service quality, led to major problems for Frontier down the road.
Frontier‘s Bankruptcy and Restructuring Woes
Fast forward to 2020 and the Frontier fairy tale started to unravel. Saddled with over $17 billion in total debt and facing operational challenges, Frontier Communications filed for Chapter 11 bankruptcy protection in April 2020.
The bankruptcy was one of the largest telecom restructurings in history. In its filing, Frontier listed $21.9 billion in total assets and $17.5 billion in liabilities as of December 31, 2019. Under the restructuring plan, Frontier aimed to reduce its debt load by approximately $10 billion and emerge as a healthier company.
The restructuring involved Frontier‘s creditors taking equity ownership stakes in the reorganized company in exchange for forgiving debt:
| Creditor Group | Equity Stake |
|---|---|
| Secured First Lien Noteholders | 76% |
| Secured Second Lien Noteholders | 12% |
| Unsecured Senior Noteholders | 12% |
One of the key issues Frontier faced after acquiring the Verizon FiOS networks was improving service quality and stemming customer losses. Many subscribers complained about frequent service outages, slower-than-expected speeds, billing problems, and poor customer service.
These problems led to Frontier losing 1.1 million total customers between 2016-2019 as the company struggled to compete with cable and wireless providers. Frontier‘s average revenue per customer also fell from $88.46 in Q2 2016 to $83.65 in Q4 2019.
Frontier aimed to use the bankruptcy process to invest $1.4 billion in fiber network upgrades, improve customer experience, and refocus on higher-margin broadband offerings. The company successfully emerged from bankruptcy in May 2021 after reducing its debt to $7.5 billion and is now charting a new path forward under new CEO Nick Jeffery.
Comparing Verizon FiOS and Frontier FiberOptic
For consumers in Frontier FiberOptic markets, it‘s natural to compare the company‘s offerings to Verizon FiOS. After all, many of those fiber networks were originally built by Verizon before the 2016 sale.
Here‘s how the two companies match up in terms of services and performance metrics:
Internet Speeds: Both Verizon FiOS and Frontier FiberOptic offer fast fiber-optic broadband with download speeds up to 940 Mbps. However, Frontier has received lower marks for actual speeds and reliability. In PCMag‘s 2021 Speed Test, Verizon FiOS ranked #1 among all providers with an average download speed of 138 Mbps. Frontier ranked #9 at 115 Mbps.
Customer Satisfaction: In the American Customer Satisfaction Index (ACSI) 2022 report, Verizon FiOS earned a score of 72/100, tied with AT&T Fiber for first place among ISPs. Frontier received a score of 57/100, second-to-last among providers. Verizon FiOS also consistently outranks Frontier in the JD Power Residential Internet Satisfaction Study.
Geographic Availability: Neither Verizon FiOS nor Frontier FiberOptic is available nationwide, but the companies focus on different regions. Verizon FiOS covers approximately 16% of the country, primarily in the Northeast and Mid-Atlantic states like New York, New Jersey, and Pennsylvania. Frontier FiberOptic is available to 11% of households, mainly in California, Texas, and Florida.
Frontier FiberOptic Availability Map (Source: BroadbandNow)
Verizon FiOS Availability Map (Source: BroadbandNow)
Pricing for Frontier FiberOptic is often slightly lower than Verizon FiOS, with gigabit plans starting at $70-80/month compared to $90/month for Verizon. However, Verizon consistently scores higher in performance metrics like actual speeds, latency and service uptime.
Both Verizon FiOS and Frontier FiberOptic also face stiff competition from major cable providers like Comcast Xfinity and Charter Spectrum in their respective markets. These cable companies have upgraded their networks with DOCSIS 3.1 technology in recent years to offer gigabit speeds over hybrid fiber-coaxial (HFC) lines.
The Future of Verizon and Frontier
As of 2023, Verizon and Frontier remain separate companies and direct competitors with no signs of an imminent merger or re-acquisition of FiOS assets. Verizon appears focused on its core wireless business, C-Band 5G network deployment, and limited FiOS expansion in the Northeast corridor. The company commands a market cap of over $200 billion.
Meanwhile, Frontier is charting an independent path after emerging from bankruptcy last year. The company‘s new leadership team has launched an aggressive fiber-to-the-home (FTTH) expansion plan called "Fiber 2.0" to grow its broadband customer base, particularly in the acquired Verizon markets of California, Texas and Florida.
Frontier aims to upgrade over 3 million homes to fiber and expand to 600,000+ new locations by the end of 2025. The company is betting heavily that fiber is the future and differentiating itself from cable competitors still using legacy coaxial infrastructure. However, Frontier‘s market cap of under $500 million and cash flow challenges mean its ambitious fiber plans still face skepticism from some industry analysts.
Looking ahead, a Verizon-Frontier reunion appears unlikely in the short term given the latter‘s recent bankruptcy and continuing fiber investments. Never say never in the fast-moving telecom world, but each company is currently moving in a separate strategic direction.
"While Verizon and Frontier share a long history and there‘s always speculation about deals in telecom, a merger between the two doesn‘t seem to be on the near-term horizon," said industry analyst Roger Entner of Recon Analytics. "Verizon is primarily focused on 5G and expanding its wireless lead right now. Frontier is heads down executing on its big fiber bet. The companies are in very different places financially and strategically."
Conclusion
So in the end, does Verizon own Frontier? The succinct answer in 2023 is no. While Verizon did sell a massive chunk of its FiOS fiber networks and customers to Frontier Communications in a $10.54 billion deal in 2016, the companies remain independent entities and direct competitors today.
Frontier‘s recent financial troubles, including a 2020 bankruptcy filing, have forced the company to restructure and reorient. It‘s now investing heavily in fiber-to-the-home overbuilds to grow broadband subscribers and improve service quality, especially in its key Florida, Texas and California markets.
Meanwhile, Verizon is lasered in on extending its 5G wireless network lead and maintaining its more limited FiOS wireline footprint in the northeastern US. There are no concrete signs of any imminent plans for Verizon to reacquire the FiOS assets it sold to Frontier seven years ago.
For consumers choosing between Verizon FiOS and Frontier FiberOptic in an overlap market, it‘s important to carefully compare current prices, performance metrics, and contract terms. While Frontier often boasts lower regular rates, Verizon FiOS still scores higher in most speed tests and customer satisfaction studies. Of course, the best option depends on the specific location, building wiring setup, and any promotions available.
The wireline broadband market continues to evolve and transform as fiber-to-the-home deployments accelerate and multi-gigabit speeds emerge. Cable players are fighting back with upgrades to DOCSIS 4.0 technology while 5G fixed wireless also expands as a new alternative. It all makes for a complex competitive landscape for Verizon FiOS, Frontier FiberOptic and others.
Only time will tell what the future holds for Verizon and Frontier in this rapidly changing telecom world. But for now, it‘s clear the two companies remain separate and independent with no imminent mergers on the horizon. Consumers should evaluate FiOS and FiberOptic on their own merits and make an informed decision based on their specific needs and local market conditions.
