dslreports logo
 story category
National Security Worries Could Thwart Verizon, Altice Deal

Rumors (started largely by one Citigroup analyst) have been circulating since last week that Verizon might want to sell the company's fixed-line assets to French telecom company Altice, which has been making it clear it wants to expand its footprint in the States after acquiring Suddenlink for $9.1 billion last month.

Click for full size
The deal's unlikely for a number of reasons, not the least of them being that Altice would immediately have to turn around and upgrade millions of neglected DSL users if it didn't want to simply lose them to cable. Verizon hasn't wanted those users for some time, so driving them to cable (or wireless) has been part of Verizon's plan.

But in a research notes to investors, Barclays analyst Amir Rozwadowski states a sale to a foreign company might also face resistance in Washington, where Verizon holds a lot of sensitive government contracts.

"One of the reasons that the Frontier transaction was relatively easier to execute, was that Verizon was selling markets that were outside its core geographic foothold in the Northeast, making the assets less strategic," wrote Rozwadowski in the report. "Moreover, the fact that Frontier is an American company meant relatively lesser regulatory hurdles."

Rozwadowski doesn't even specifically mention Verizon's cozy relationship with the NSA. That relationship recently became even cozier with the passage of the USA Freedom Act, which tasks the phone companies with retention and dissemination of metadata at the request of the FISA court.

As such, the most likely scenario is that Verizon continues to sell off unwanted DSL markets piecemeal. The problem is that there's only so much debt and un-upgraded networks companies like Frontier and CenturyLink can digest before falling squarely on their collective faces, making a buy of Verizon's entire fixed-line footprint unlikely.

Most recommended from 19 comments



ITALIAN926
join:2003-08-16

3 recommendations

ITALIAN926

Member

Split

Verizon should split the damn company, the same way that Sprint spun off wireline into Embarq years back. For Verizon to actually SELL the wireline division, putting the new company into massive debt, (and unable to upgrade/expand FiOS networks) is immoral, it should be illegal. If anything, Verizon wireline, the actual parent company, should be selling, yes, I said it, Verizon WIRELESS.