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Frontier, Verizon, DISH Network, Time Warner Cable and Motorola

^{Published on 2010-07-06 16:35:39 - Market Wire}
 

CHICAGO--([ BUSINESS WIRE ])--Zacks.com Analyst Blog features: Frontier Communication (NYSE: [ FTR ]), Verizon Communications (NYSE: [ VZ ]), DISH Network Corporation (Nasdaq: [ DISH ]), Time Warner Cable (NYSE: [ TWC ]), Motorola Inc. (NYSE: [ MOT ]).

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Here are highlights from Fridaya™s Analyst Blog:

Frontier Buys Verizon Operations

Frontier Communication (NYSE: [ FTR ]), a provider of telecommunications services as an incumbent local exchange carrier, completed its acquisition of Verizon Communicationsa™ (NYSE: [ VZ ]) local wireline operations across 14 states for $5.3 billion.

Frontier focuses mainly on small towns and rural areas. With the acquisition, the company has taken control over 4.8 million Verizon phone lines, tripling its size to become the largest rural-only service provider in the United States. Frontier will now offer voice, satellite video, high-speed internet, wireless Internet data access, FiOS and other services to more than 4 million residential and business customers in 27 states.

Verizon shareholders are receiving $5.3 billion in Frontier common stock and Verizon is receiving $3.3 billion in cash. Verizon shareholders will now have ownership of 68% of Frontier stock, effective immediately after the transaction. The completed transaction will boost earnings and provide cost synergies of approximately $500 million, which will drive Frontiera™s profitability and free cash flow generation.

Frontier is expanding its high-speed Internet and satellite TV subscriber bases through aggressive bundled service offerings and promotional initiatives. Momentum for Frontiera™s satellite video service remains strong attributable to aggressive promotional initiatives and increased market penetration of aTriple-Playa (video, voice and Internet) bundled services which the company offers in collaboration with Echostar's DISH Network Corporation (Nasdaq: [ DISH ]).

The merger with Verizon wireline operations enhance Frontiera™s broadband deployment and high speed lines in institutions such as libraries, hospitals and government buildings in un-served and under-served communities. Frontier will deploy high-speed Internet of at least 3 megabits per second (Mbps) downstream to at least 85% of transferred lines by the end of 2013, and increase the speed to at least 4 Mbps downstream by the end of 2015.

Frontier remains significantly challenged by the fragile economic condition in its service territories and competes with the loss of legacy fixed telephony business to wireless and other competitive offerings. Approximately 65% of Frontiera™s access lines are exposed to cable voice service offerings.

The persistent decline in access lines continues to tighten local service revenue, which accounts for most of Frontiera™s overall revenues. The growing presence of Time Warner Cablea™s (NYSE: [ TWC ]) Voice over Internet Protocol (VoIP) offerings in Rochester (Frontiera™s largest non-rural market representing 25% of its total access lines) further impedes the companya™s addressable market.

We are currently holding our Neutral recommendation on Frontier with the Zacks rank of #3 (Hold).

Motorola Renames Spin-off Companies

Motorola Inc. (NYSE: [ MOT ]) moved a step ahead regarding its previously announced spin-off of its Mobile Devices and Home businesses by renaming the newly formed separate entities.

The Mobile Devices and Home Division will be renamed as Motorola Mobility and the Enterprise Mobility Solutions and Networks businesses will be known as Motorola Solutions.

Motorola created a new unit called Motorola SpinCo, a holding company for Motorola Mobility, which filed the Form 10 Registration Statement with the SEC. The deal will likely be wrapped up by the end of the first quarter of fiscal 2011.

The spin-off has been in progress since early 2008. Motorola has incurred losses of about $5 billion over the past three years, due to the weakening sales. As of April 3, 2010, Motorola had $8.48 billion in cash and investments. Total debt at the end of the first quarter 2010 summed up to $3.9 billion.

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