Verizon to buy XO’s fibre network in $1.8 billion deal

23 February 2016 | Jason McGee-Abe

Verizon has signed an agreement to acquire the fibre-optic network business of XO Communications for a fee of around $1.8 billion.

The deal, which is expected to be completed in the first half of 2017, will see new ownership of the fibre-based IP and ethernet networks help Verizon to better serve its enterprise and wholesale customers. The fibre facilities will also densify its cell network.

“This transaction will create a stronger provider of business broadband services for the customers of XO Communications,” said Chris Ancell, CEO of XO Communications.

On a separate note, Verizon will also simultaneously lease available XO wireless spectrum, with an option to buy that spectrum by year-end 2018.

The news comes after a turbulent time for XO Communications, which emerged from bankruptcy in 2003. “The following 13 years were a bumpy road for XO, as well as other telecoms, as we reckoned with major network overcapacity and other issues caused by overly optimistic projections and capital expenditures made by previous owners”, added Carl Icahn, chairman and sole shareholder of XO Holdings.

Verizon expects the net present value of the operational synergies to be in excess of $1.5 billion.

While Verizon and XO pursue requisite regulatory approvals, XO will continue to operate independently.

The news comes after Verizon announced plans to trial a LTE-Unlicensed system to enhance capacity over the unlicensed 5GHz band.