Verizon in $1.8 bn deal to buy fiber optic network biz from XO

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Telecom network operator Verizon Communications is acquiring the fiber optic network business from XO Communications in a deal valued at nearly $1.8 billion.

The acquisition is subject to regulatory approval from governmental agencies and is expected to close in the first half of 2017, said XO.

Verizon aims to serve its enterprise and wholesale customers by buying XO’s fiber-based IP and Ethernet networks. In addition, the acquired fiber facilities will help Verizon continue to densify its cell network. AT&T competes with Verizon in the US and international enterprise communication markets.

Verizon will also simultaneously lease available XO wireless spectrum, with an option to buy that spectrum by year-end 2018.

“This transaction will create a stronger provider of business broadband services for the customers of XO Communications,” said Chris Ancell, chief executive officer of XO Communications.

While Verizon and XO pursue requisite regulatory approvals from governmental agencies, XO will continue to operate independently.

Citigroup acted as financial adviser and Debevoise & Plimpton LLP acted as legal adviser to Verizon. Evercore is serving as XO’s financial advisor in connection with the transaction. Thompson Hine LLP is serving as XO’s legal advisor in connection with the transaction.

Verizon expects to receive several financial benefits from the transaction, including a step-up in the basis of the assets as well as operating and capital expense savings. The net present value of the operational synergies is expected to be in excess of $1.5 billion.

editor@telecomlead.com