Verizon Communications is casting off its plain, old telephone service in 14 states.
In its ongoing effort to focus on wireless and broadband, Verizon announced on Wednesday plans to sell 4.5 million landlines and related assets to Frontier Communications. The operations are based across 14 states, mostly tied to residential and small-business customers in rural areas.
"This transaction is part of our multiyear effort to transform our growth profile and asset base to focus on wireless, FiOS fiber-optic services and other broadband development, and global IP," said Ivan Seidenberg, chief executive officer of Verizon. "All of Verizon's remaining local landline operations have high concentrations of FiOS in more densely populated markets."
Verizon shareholders will be big beneficiaries. As part of the deal, Frontier will merge with a new company that will be spun off as common stock to Verizon investors. The transaction is expected to net Verizon and its stockholders a total value of $8.6 billion, according to Verizon.
The deal also stands to increase the size and foothold of Stamford Conn.-based Frontier. "With more than 7 million access lines in 27 states, we will be the largest pure rural communications provider of voice, broadband and video services in the U.S.," Frontier CEO Maggie Wilderotter said.
The transaction includes all of Verizon's landline assets in Arizona, Idaho, Illinois, Indiana, Michigan, Nevada, North Carolina, Ohio, Oregon, South Carolina, Washington, West Virginia, and Wisconsin, as well as some assets in California. Verizon expects the deal to be completed within 12 months.
The move is the latest in Verizon's efforts to shake up and refocus its operations. Earlier this week, Verizon said it will sell the wireless assets it picked up from Alltel, a requirement of its recent merger with Alltel. AT&T will pay Verizon $2.35 billion for the wireless licenses, subscribers, and other assets. In return, AT&T will sell Verizon its former Centennial wireless operations.
More Americans are ditching traditional landlines in favor of cell phone services, according to the results of a federal survey released Wednesday.
More than one in six American households, or 17.5 percent, depended solely on cell phones for their telephone communications during the first half of 2008, up from 13.6 percent a full year earlier, according to survey results released by the Centers for Disease Control and Prevention. And 13.3 percent of American households reportedly received all or almost all of their calls on cell phones despite having a landline telephone in their home.
The group relying most on cell-only service was unrelated adults living as roommates (63 percent), followed by adults aged 25-29 years (35.7 percent), and renters (33.6 percent).
Men (18 percent) were more likely than women (14.4 percent) to be living in households with only cell service, while adults living in poverty (26 percent) and adults living near poverty (22.6 percent) were more likely than adults with higher incomes (14.2 percent) to be living in households with only cell phones.
However, the survey also found that cell-only households were more likely to contain binge drinkers (37.7 percent) than those having landline phones (17.2 percent).
The findings mirror those released by Nielsen Mobile in September that found more than 20 million households in America, or about 17 percent, had dumped their landline service for cell phones. And the trend is expected to continue as more Americans feel the squeeze from the weakening economy. Many see traditional phone service, which averages about $40 a month, as a household expense that can be cut, especially since more than 85 percent of the U.S. population own a cell phone.
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