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Verizon Seeks Expansion Through Purchase Of XO Communications Fiber Optic Network

02/23/2016
Verizon Communications Inc. seeks to expand with the signing of an agreement to purchase XO Communications of Herndon, Virginia’s, fiber-optic network business for approximately $1.8 billion.

XO Communications noted it provides the technology that helps business and wholesale customers compete in a hyper-connected economy. In the U.S., XO owns and operates one of the largest IP and Ethernet networks that customers rely on for private data networking, cloud connectivity, unified communications and voice, Internet access, and managed services.

According to XO, “this transaction would provide Verizon access to XO’s fiber-based IP and Ethernet networks, helping to better serve enterprise and wholesale customers. In addition, the acquired fiber facilities will help Verizon continue to densify its cell network. Separately, Verizon will also simultaneously lease available XO wireless spectrum, with an option to buy that spectrum by year-end 2018."

The acquisition is subject to regulatory approval from various governmental agencies and is expected to close in the first half of 2017. While Verizon and XO pursue requisite regulatory approvals from governmental agencies, XO will continue to operate independently.

“This transaction will create a stronger provider of business broadband services for the customers of XO Communications,” said Chris Ancell, CEO of XO Communications.

Carl C. Icahn, the Chairman/Sole Shareholder of XO Holdings, said: “In 2001, I began purchasing the senior debt of XO, and the following year the company filed for bankruptcy. I then worked diligently with other stakeholders to keep XO alive, and in 2003 the company emerged from bankruptcy."

“The following thirteen years were a bumpy road for XO, as well as other telecoms, as we reckoned with major network overcapacity and other issues caused by overly optimistic projections and capital expenditures made by previous owners. In fact, we had to inject additional capital into the company several times over those years to keep it operating,” he said. “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.”

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