8-KMaterial AgreementsRegulation FDOther Events+1

VERIZON COMMUNICATIONS INC 8-K Report, Material Agreement (Feb 5, 2015)

Filed February 5, 2015For Securities:VZ

Summary

Verizon Communications Inc. (VZ) filed an 8-K on February 5, 2015, detailing significant strategic transactions aimed at restructuring its business and returning capital to shareholders. The company announced the sale of its wireline assets in California, Florida, and Texas to Frontier Communications for approximately $10.54 billion, a move that will reduce Verizon's wireline footprint and streamline operations. This divestiture includes FiOS Internet and Video customers in these regions and involves the transfer of approximately 11,000 employees. Concurrently, Verizon is strengthening its core wireless business and infrastructure by entering into an agreement with American Tower Corporation. This transaction involves the sale of 165 wireless sites and a master prepaid lease for over 11,300 Verizon-owned towers, generating approximately $5.056 billion in cash. The company also announced an accelerated share repurchase (ASR) program to buy back $5.0 billion of its common stock, indicating a commitment to shareholder returns.

Key Highlights

  • 1Sale of California, Florida, and Texas wireline business to Frontier Communications for approximately $10.54 billion (cash and assumed debt).
  • 2Divestiture includes FiOS Internet and Video customers in the specified states, impacting approximately 3.7 million voice connections and 2.2 million high-speed data customers.
  • 3Sale of 165 wireless sites and a master prepaid lease for over 11,300 Verizon-owned towers to American Tower Corporation for approximately $5.056 billion in cash.
  • 4Entering into a master prepaid lease with American Tower for over 11,300 towers, granting exclusive rights for approximately 28 years.
  • 5Announcement of an Accelerated Share Repurchase (ASR) agreement to buy back $5.0 billion of Verizon's common stock.
  • 6The ASR is funded by cash on hand and is in addition to a previously announced share repurchase program.
  • 7Approximately 11,000 Verizon employees are expected to transition to Frontier Communications.

Frequently Asked Questions

Verizon is divesting its legacy wireline operations in specific states to focus more on its core, high-growth wireless business and related infrastructure. The proceeds from these sales, along with the tower lease agreement, provide capital to strengthen the balance sheet and return value to shareholders through share repurchases.

Customers in these states who subscribed to Verizon's local exchange and related business assets, including FiOS Internet and Video services, will have their services transferred to Frontier Communications. The transaction does not include Verizon Wireless or Verizon Enterprise Solutions.

This transaction allows Verizon to monetize a significant portion of its tower infrastructure, generating substantial cash while retaining access to the towers for its wireless operations through a long-term lease agreement. This provides capital and operational flexibility.

The accelerated share repurchase program indicates Verizon's confidence in its business and its commitment to returning capital to shareholders by reducing the number of outstanding shares, which can potentially increase earnings per share (EPS) and shareholder value.