Verizon is bidding adieu to several key assets as it narrows its focus.
The nation's largest wireless provider said Thursday that it has agreed to sell its local wireline operations in California, Florida and Texas to Frontier Communications for $10.54 billion. Verizon also agreed to lease the rights to 11,300 company-owned cellular towers and sell 165 more to American Tower in a separate deal worth $5 billion.
As a result of the transactions, Verizon also said it would begin a new $5 billion stock buyback program.
The deals underscore the importance of Verizon's wireless business, which generates more than 70 percent of the company's revenue. At a time when smaller competitors such as T-Mobile and Sprint are picking off its customers, Verizon needs to keep its attention squarely on the mobile business. The $15.54 billion will also come in handy after the company made bids for $10.4 billion worth of spectrum in the most recent government auction.
Verizon said it will use proceeds from the tower deal to reduce its term loan, which is helping to fund the spectrum purchase. The wireline proceeds will go toward reducing debt.
Verizon and Frontier are old dance partners. Frontier purchased 4.5 million landlines from Verizon in 2009. Thursday's transaction, which consists of $9.9 billion in cash and $600 million in assumed debt, is expected to close in the first half of next year. Verizon said 11,000 employees will shift over to Frontier once the sale is complete.
"Frontier has a solid track record of successful integrations, and we welcome the new employees who will help us implement our local engagement model in these markets," Frontier CEO Maggie Wilderotter said in a statement.
After shedding those assets, Verizon's landline business will be located only on the East Coast, centered on its New York headquarters. The assets that Frontier will acquire include 3.7 million voice customers, 2.2 million DSL customers, 1.6 million Fios Internet customers and 1.2 million Fios video customers.
Verizon is keeping wireline operations that still serve 16.1 million wireline voice connections, 7 million DSL customers, 5.1 million Fios Internet customers and 4.5 million Fios video customers.
American Tower, which is the second-largest manager of cellular towers in the nation, will get the right to manage the towers and strike deals with other carriers, potentially improving the coverage for its competitors. Verizon will continue to have its radios on the tower and said it will have access to additional reserve capacity on the towers for future use.
Verizon expects to close the American Tower deal by the middle of the year.