Verizon Agrees to Buy XO Communications' Fiber Business for $1.8B (2/22/2016)
Verizon Communications and XO Communications announced in February that Verizon has signed an agreement to buy XO's fiber optic network business for about $1.8 billion. The deal is still subject to regulatory approval and is expected to close during the first half of 2017.
Verizon has stated its acquisition of the fiber-based IP and Ethernet networks will enhance its ability to serve wholesale and enterprise clients, in addition to densifying its network. Acquiring XO's fiber assets will provide Verizon with more infrastructure to sell fiber optic junctions that serve as a faster bridge between landline and mobile networks.
Furthermore, Verizon expects to experience financial benefits from the deal, including a step-up in the basis of assets and operating and capital expense savings. The company anticipates that the net present value of the operational synergies will top $1.5 billion.
Additionally, Verizon will simultaneously lease available XO wireless spectrum, with the option to buy by the end of 2018. The XO spectrum is in bands Verizon can use for early 5G network testing, Bob Varettoni, a Verizon spokesman, told Bloomberg Business. XO has 102 licenses to spectrum in the range of 28 to 39 gigahertz, covering 45 percent of the U.S., according to Varettoni.
XO will continue operating independently while it and Verizon seek regulatory approval from government agencies.
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