Verizon to buy Frontier Communications for $20B

• The merger is expected to close in about 18 months, subject to Frontier shareholders' and regulatory approval.

By the numbers: Verizon agreed to pay $38.50 per share in cash, a 37% premium to where Frontier traded before news leaked of a pending deal.

• The deal boosts Verizon's scale and geographic reach in fiber. Frontier's 2.2 million fiber customers across 25 states will combine with Verizon's 7.4 million Fios customers in nine states and Washington, D.C.
• Some of those Frontier subscribers used to belong to Verizon, which sold select assets to Frontier nearly a decade ago.

Zoom out: The race to build fiber networks has increased as wireless growth has slowed. But building out fiber networks is costly, which makes acquisitions more enticing.

• AT&T has made expanding its 5G and fiber business one of its main priorities since shedding WarnerMedia in 2022.
• In July, T-Mobile agreed to spend around $4.9 billion to form a joint venture with KKR to buy Metronet.

Catch up quick: Frontier filed for bankruptcy in 2020 and reemerged a year later as a smaller company focused on building out the next generation of fiber optic cable.

• Last October, activist investor Jana Partners took a stake and pushed Frontier to consider a sale. In February, the company launched a strategic review.

What they're saying: "The acquisition of Frontier is a strategic fit. It will build on Verizon's two decades of leadership at the forefront of fiber and is an opportunity to become more competitive in more markets throughout the United States," Verizon CEO Hans Vestberg said in a statement.

• "Today's announcement is recognition of our progress building a best-in-class fiber network and delivering reliable, high-speed broadband to millions of customers across the country. It's also a vote of confidence for the future of fiber," Frontier CEO Nick Jeffery said in a statement.

What we're watching: Vestberg said on Thursday's conference call that the deal expands the company's addressable market, strengthens its position in home broadband and grows its revenue.

• Analysts repeatedly asked about future M&A, to which Vestberg stressed the value of this deal.
• "When we close this, I think we're going to be very happy with assets we have, and we can address a totally bigger market, which is going to be good for long-term, sustainable growth of the overall company," Vestberg said on the call.

Centerview Partners and Morgan Stanley served as financial advisers and Debevoise & Plimpton as legal counsel to Verizon.

• PJT Partners served as financial adviser and Paul, Weiss, Rifkind, Wharton & Garrison as legal adviser to the strategic review committee of the board of Frontier.
• Barclays served as financial adviser and Cravath, Swaine & Moore as legal adviser to Frontier.

Editor's note: This story was updated with additional information.