Verizon Sharpens Strategic Focus and Returns Value

Verizon Sharpens Strategic Focus and Returns Value to Investors With Transactions Valued at $15.54 Billion Selling Wireline Assets in Three States to Frontier for $10.54 Billion; Generating $5 Billion of Initial Cash for Wireless Towers in Transaction WithAmerican Tower; $5 Billion Share Repurchase NEW YORK, Feb. 5, 2015 -- Verizon Communications Inc. (NYSE, Nasdaq: VZ) today announcedtwo major transactions designed to further sharpen its strategic focus: * Verizon has reached a definitive agreement to sell its local wireline operations serving customers in California, Florida and Texas to Frontier Communications Corporation (Nasdaq: FTR). Frontier will pay Verizon approximately $10.54 billion (approximately $9.9 billion in cash, plus $600 million in assumed debt) for the business and related assets in these states. * Verizon has agreed to lease the rights to over 11,300 of its company-owned wireless towers to American Tower Corporation (NYSE: AMT), which will also purchase approximately 165 Verizon towers, for a total upfront payment of approximately $5 billion. At the same time, Verizon is returning a significant amount of capital to itsshareholders through a $5 billion accelerated share-repurchase program enteredinto today. Verizon Chairman and CEO Lowell McAdam said: "Our long-standing strategy hasbeen to consistently invest in our networks, improve our customers' experience,and develop new products and services while delivering profitable growth. Thesetransactions will further strengthen Verizon's focus on extending our industryleadership position in our core markets and return significant value to ourshareholders." Details of the Verizon - Frontier Transaction Selling wireline operations in California, Florida and Texas to Frontier willconcentrate Verizon's wireline operations on the East Coast. Verizon will focuson further penetrating the market for its FiOS business across a contiguousfootprint in Eastern states. Frontier currently has access lines in 28 states, providing an array of voice,broadband and video services, including landline assets purchased from Verizonin 2009-2010. Maggie Wilderotter, Frontier's chairman and chief executive officer, said:"These properties align with Frontier's disciplined strategic focus and enhanceour footprint with rich fiber-based assets. We look forward to building on thestrong results Verizon has delivered in these three states. Frontier has asolid track record of successful integrations, and we welcome the new employeeswho will help us implement our local engagement model in these markets." Completion of the transaction is subject to customary closing conditionsincluding, among others, obtaining certain regulatory approvals. The companiesare targeting completing the transaction in the first half of 2016. Approximately 11,000 Verizon company employees are expected to continueemployment with Frontier after the transaction. Frontier and Verizon willprovide a smooth transition for these employees. As they did during the companies' previous transaction, Verizon and Frontiertransition teams will work to ensure that customer accounts, billinginformation and other assets from the operations are successfully transferredto Frontier and that the transition is seamless for customers as well asemployees. The operations Frontier will acquire consist of all of Verizon's local wirelineoperating territories in California, Florida and Texas. At the end offourth-quarter 2014, these operations served approximately 3.7 million voiceconnections; approximately 2.2 million high-speed data customers, includingapproximately 1.6 million FiOS Internet customers; and approximately 1.2million FiOS Video customers. The transaction includes Verizon's FiOS Internet and Video customers, switchedand special access lines, as well as its high-speed Internet service andlong-distance voice accounts in these three states. Frontier will continue toprovide video services in these states after the completion of the transaction. The transaction does not include the services, offerings or assets of otherVerizon businesses, such as Verizon Wireless and Verizon Enterprise Solutions. As of the end of fourth-quarter 2014, the consumer and mass business wirelineoperations that Verizon is retaining provided service in nine states and theDistrict of Columbia and had approximately 16.1 million wireline voiceconnections; 7.0 million high-speed data customers, including approximately 5.1million FiOS Internet customers; and 4.5 million FiOS Video customers. Thestates in Verizon's contiguous consumer wireline footprint are Connecticut,Delaware, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, RhodeIsland, Virginia and Washington, D.C. Credit Suisse, Guggenheim Securities and PJT Partners advised Verizon on thetransaction. Details of the Verizon - American Tower Transaction In the wireless tower transaction, American Tower will have exclusive rights tolease and operate over 11,300 Verizon cell towers, a significant majority ofthe towers the company currently owns. In addition, Verizon will sellapproximately 165 towers outright. The average term of the lease rights is about 28 years. As the leases expire,American Tower will have fixed-price purchase options to acquire these towersbased on their anticipated fair market values at the end of the lease terms. Verizon will sublease capacity on the towers from American Tower for a minimumof 10 years for $1,900 per month per site, with annual rent increases of 2percent. Verizon will have customary renewal options that could potentiallyextend the full term of the sublease to 50 years. Verizon will have access to additional reserve capacity on the towers forfuture use and expects to use this additional capacity to help continuouslyimprove the nation's most reliable network. During the terms of the leases, American Tower will have full operating rightsto and responsibilities for the towers. American Tower's rights will includethe ability to sublease other available space to other companies. Verizon expects the transaction to close by mid-2015, subject to standardclosing conditions. $5 Billion Returned to Shareholders Through Share Repurchase Under the terms of the accelerated stock repurchase (ASR) agreement, Verizonwill repurchase $5 billion of its common stock and expects to receive aninitial delivery of shares having a value of approximately $4.25 billion. Thetotal number of shares that Verizon will repurchase under the ASR agreementwill be based generally upon the volume-weighted average share price ofVerizon's common stock during the term of the transaction. Final settlement of the transaction under the ASR agreement, including deliveryof the remaining shares that Verizon expects to receive, is scheduled to occurin the second quarter of 2015. Verizon is funding the ASR with cash on hand. The ASR is in addition to Verizon's three-year share repurchase programannounced on March 7, 2014. Under the three-year program, Verizon is authorizedto repurchase 100 million shares of its common stock. That program is set toterminate on Feb. 28, 2017, or when the aggregate number of shares purchasedunder the program reaches 100 million, whichever date is earlier. To date, noshares have been repurchased under the program. Verizon Webcast Today Verizon will provide further details of these transactions during a webcast at5:15 p.m. Eastern Time today on Verizon's Investor Relations website,www.verizon.com/about/investors/, where presentation materials have beenposted. Verizon Communications Inc. (NYSE, Nasdaq: VZ), headquartered in New York, is aglobal leader in delivering broadband and other wireless and wirelinecommunications services to consumer, business, government and wholesalecustomers. Verizon Wireless operates America's most reliable wireless network,with more than 108 million retail connections nationwide. Verizon also providesconverged communications, information and entertainment services over America'smost advanced fiber-optic network, and delivers integrated business solutionsto customers worldwide. A Dow 30 company with more than $127 billion in 2014revenues, Verizon employs a diverse workforce of 177,300. For more information,visit www.verizon.com/news/. VERIZON'S ONLINE NEWS CENTER: Verizon news releases, executive speeches andbiographies, media contacts and other information are available at Verizon'sonline News Center at www.verizon.com/news/. The news releases are availablethrough an RSS feed. To subscribe, visit www.verizon.com/about/rss-feeds/. Forward-Looking Statements In this communication we have made forward-looking statements. These statementsare based on our estimates and assumptions and are subject to risks anduncertainties. Forward-looking statements include the information concerningour possible or assumed future results of operations. Forward-lookingstatements also include those preceded or followed by the words "anticipates,""believes," "estimates," "hopes" or similar expressions. For those statements,we claim the protection of the safe harbor for forward-looking statementscontained in the Private Securities Litigation Reform Act of 1995. Thefollowing important factors, along with those discussed in our filings with theSecurities and Exchange Commission (the "SEC"), could affect future results andcould cause those results to differ materially from those expressed in theforward-looking statements: adverse conditions in the U.S. and internationaleconomies; the effects of competition in the markets in which we operate;material changes in technology or technology substitution; disruption of ourkey suppliers' provisioning of products or services; changes in theregulatory environment in which we operate, including any increase inrestrictions on our ability to operate our networks; breaches of network orinformation technology security, natural disasters, terrorist attacks oracts of war or significant litigation and any resulting financial impactnot covered by insurance; our high level of indebtedness; an adversechange in the ratings afforded our debt securities by nationally accreditedratings organizations or adverse conditions in the credit markets affecting thecost, including interest rates, and/or availability of further financing;material adverse changes in labor matters, including labor negotiations, andany resulting financial and/or operational impact; significant increases inbenefit plan costs or lower investment returns on plan assets; changes in taxlaws or treaties, or in their interpretation; changes in accounting assumptionsthat regulatory agencies, including the SEC, may require or that result fromchanges in the accounting rules or their application, which could result in animpact on earnings; and the inability to implement our business strategies. SOURCE Verizon Communications Inc. CONTACT: Media Contacts: Alberto Canal, 908-559-6367,[email protected]; Harry Mitchell, 304-356-3404,[email protected]; Bob Varettoni, 908-559-6388,[email protected]