Verizon, Frontier Landline Sale Clears Big Hurdle

The controversial Verizon-Frontier landline deal has cleared a major hurdle as the companies seek to close their $8.6 billion transaction.

Regulators in West Virginia on Thursday blessed the sale, closing the book on any chance that the Communications Workers of America (CWA) union might can Verizon and Frontier’s plans. Union members fear the spinoff will create job losses and 5,000 residents of the recession-suffering state agreed, signing a petition that the deal be rejected. Even the state’s Public Service Commission (PSC) staff had recommended their bosses nix the proposed sale of Verizon’s landlines to Frontier.

But PSC commissioners said the merger’s benefits outweigh its risks. Other states, including Arizona, Illinois, Ohio and Washington, have said the same. West Virginia was the last state from which Verizon and Frontier needed approval.

Verizon is getting rid of the landlines, as it did with FairPoint and Hawaiian Telcom a couple of years ago, so it can focus on its profitable wireless and broadband businesses. Frontier announced last May it would buy 4.8 million of Verizon’s access lines in 14 states. The deal will turn Frontier into the largest rural communications provider in the United States. Opponents fear Frontier is taking on far too much debt, just like FairPoint and Hawaiian Telcom, which both filed for bankruptcy after buying Verizon assets. But proponents pooh-pooh those concerns, saying Frontier doesn’t have the same financial troubles their ILEC peers faced prior to taking over Verizon properties.

The FCC still must approve the Verizon-Frontier spinoff and analysts say Frontier is working on some conditions that may make the deal more palatable for federal regulators.

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