Analysis: Verizon/Frontier – Frontier’s side
Posted May 14, 2009on:
Frontier has an uphill battle selling this deal to regulations and its own shareholders. The ghost of the Verizon/FairPoint deal in Northern New England is going to loom strongly for anyone who followed the train wreck when FairPoint switched over its back office systems from Verizon’s rentals to its own gear. Also the not-so-little matter that FairPoint has had cash problems.
:et’s not forget the sheer size of this deal: In one fell swoop, Frontier is going to more than triple the number of landline customers it has, along with picking up 110,000 FiOS Internet customers and 69,000 FiOS TV cusstomers.
Before the deal, Frontier had around 2.2 million landlines. It adds 4.8 million new landlines for a total of 7 million. Sure, Frontier is going to get 11,000 former Verizon employees to handle it all, but don’t expect smooth sailing by any stretch of the imagination.
Frontier, however, may be better able to learn from FairPoint’s mistakes, especially in transitioning over customers from Verizon’s email systems and other customer service areas.
As you’d expect, Frontier is confident it can triple the number of landline subscribers it has without breaking a sweat and integrate in those 11,000 employees.
Wall Street seems to like Frontier’s move, but we’ll see how long that lasts once the transition reports start coming in.