- Verizon wants to raise $10 billion in corporate bonds for its Frontier purchase, per Bloomberg
- It’s not uncommon for these kinds of large-scale M&A to get bond financing, said Recon Analytics’ Roger Entner
- Verizon/Frontier is still waiting on full state regulatory approval – namely California
As Verizon prepares to finalize its $20 billion Frontier acquisition deal sometime next year, a Bloomberg report indicated Verizon is looking to raise $10 billion in corporate bonds to fund the transaction.
“It just means that they believe the closing is imminent,” MoffettNathanson analyst Craig Moffett told us.
While $10 billion is a lot, it’s not too surprising considering the terms of the deal. When Verizon first announced the Frontier acquisition in September 2024, it also agreed to absorb – and eventually refinance – roughly $10 billion of Frontier’s existing debt.
A new SEC filing today indicates the process is underway. Verizon said it plans to use net proceeds from the bond sale to fund the Frontier purchase “including related costs and expenses, to refinance indebtedness of Frontier, and the remainder, if any, for general corporate purposes.”
Bloomberg noted Verizon already lined up $10 billion in short-term bank funding to finance the purchase. This next step is fairly run-of-the-mill for large-scale M&A, according to Recon Analytics Principal Roger Entner.
“All of these acquisitions get financed through bond sales,” he said. AT&T is reportedly aiming to raise at least $4 billion in a similar manner following its $23 billion purchase of EchoStar spectrum.
State of Verizon/Frontier approval
Verizon is stepping up its Frontier financing when it still hasn’t received the necessary state regulatory approval – namely from California – to close the deal.
Nevertheless, company leadership remains optimistic that the deal can get done on time.
“We have received approvals from 11 of 13 states and are making good progress in the remaining jurisdictions,” said Verizon CFO Tony Skiadas on the Q3 earnings call. “Integration planning is on track.”
California’s main gripe with Verizon is the operator’s decision to end its diversity, equity and inclusion (DEI) programs so that the FCC could sign off on the merger.
The state struck a partial settlement with Verizon in September, which included an agreement to expand Verizon’s fiber build plan in California and a requirement to offer a $20/month broadband option to low-income consumers.
But the DEI matter remains unresolved. Verizon has urged the California Public Utilities Commission (PUC) to approve the deal by December 18, when the agency is scheduled to have its final meeting of the year.
Delaying approval any further “would deepen Frontier’s financial challenges and delay further fiber deployment in California,” Verizon argued in its petition.