Verizon to buy XO Communications fiber-optic network assets

Feb. 22, 2016
Verizon Communications Inc. (NYSE, NASDAQ: VZ) has agreed to acquire the fiber-optic network business of XO Communications for approximately $1.8 billion. Verizon expects the purchase to improve its ability to service enterprise and wholesale customers as well as support its growing cellular operations.

Verizon Communications Inc. (NYSE, NASDAQ: VZ) has agreed to acquire the fiber-optic network business of XO Communications for approximately $1.8 billion. Verizon expects the purchase to improve its ability to service enterprise and wholesale customers as well as support its growing cellular operations.

The two companies expect the deal to close in the first half of 2017, subject to regulatory approval. XO will continue to operate independently until that time.

Verizon will gain access to XO's fiber-based IP and Ethernet networks (see, for example, "XO Communications plans fiber network expansion" and "XO Communications offers bandwidth-on-demand"). The company says it also has reached a deal to lease available XO wireless spectrum, with an option to buy that spectrum by the end of 2018.

The Tier 1 service provider also expects what it described as "several financial benefits" from the deal. These include a step-up in the basis of the assets as well as operating and capital expense savings. Verizon says the net present value of the operational synergies is expected to be greater than $1.5 billion.

Well-known investor Carl C. Icahn, chairman and sole shareholder of XO Holdings, sounded more resigned than thrilled at the deal. "Although this sale to Verizon does not represent a significant annualized return on our investment, we believe that in today's environment it does represent the best achievable outcome for the company's customers, employees and owner," he said in a press statement.

Icahn noted that he began purchasing the senior debt of XO in 2001 and the company filed for bankruptcy the following year. It emerged from bankruptcy in 2003 but subsequently required periodic capital injections.

For more information on high-speed transmission systems and suppliers, visit the Lightwave Buyer's Guide.


About the Author

Stephen Hardy | Editorial Director and Associate Publisher

Stephen Hardy has covered fiber optics for more than 15 years, and communications and technology for more than 30 years. He is responsible for establishing and executing Lightwave's editorial strategy across its digital magazine, website, newsletters, research and other information products. He has won multiple awards for his writing.

Contact Stephen to discuss:

  • Contributing editorial material to the Web site or digital magazine
  • The direction of a digital magazine issue, staff-written article, or event
  • Lightwave editorial attendance at industry events
  • Arranging a visit to Lightwave's offices
  • Coverage of announcements
  • General questions of an editorial nature

Sponsored Recommendations

Understanding BABA and the BEAD waiver

Oct. 29, 2024
Unlock the essentials of the Broadband Equity, Access and Deployment (BEAD) program and discover how to navigate the Build America, Buy America (BABA) requirements for network...

How AI is driving new thinking in the optical industry

Sept. 30, 2024
Join us for an interactive roundtable webinar highlighting the results of an Endeavor Business Media survey to identify how optical technologies can support AI workflows by balancing...

Next-Gen DSP advancements

Nov. 13, 2024
Join our webinar to explore how next-gen Digital Signal Processors (DSPs) are revolutionizing connectivity, from 400G/800G networks to the future of 1.6 Tbps, with insights on...

The Road to 800G/1.6T in the Data Center

Oct. 31, 2024
Join us as we discuss the opportunities, challenges, and technologies enabling the realization and rapid adoption of cost-effective 800G and 1.6T+ optical connectivity solutions...