Frontier Communications to leave Cascadia; PNW assets sold to WaveDivision Capital

Telecom­mu­ni­ca­tions firm Fron­tier Com­mu­ni­ca­tions is say­ing adieu to Cascadia.

Nine years after tak­ing on debt to buy Ver­i­zon’s assets in the region, Fron­tier Com­mu­ni­ca­tions is offload­ing those same assets in a $1.35 bil­lion sale to Kirk­land-based Wave­Di­vi­sion Cap­i­tal, which must be approved by regulators.

If the sale goes through, Fron­tier will exit the each of the Wash­ing­ton, Ore­gon, Ida­ho, and Mon­tana mar­kets where it cur­rent­ly operates.

Fron­tier North­west was formed in 2010 from the merg­er of Ver­i­zon North­west (pre­vi­ous­ly GTE North­west) with Fron­tier’s rur­al Ida­ho operations.

“The sale of these prop­er­ties reduces Frontier’s debt and strength­ens liq­uid­i­ty,” said Dan McCarthy, Fron­tier Pres­i­dent and Chief Exec­u­tive Offi­cer, in a news release.

“We are pleased to have a buy­er with exten­sive expe­ri­ence build­ing and oper­at­ing advanced fiber-based com­mu­ni­ca­tions assets in these regions,” McCarthy added. “We will be work­ing very close­ly with the new own­ers to ensure a smooth, suc­cess­ful tran­si­tion for our cus­tomers and the com­mu­ni­ties we serve.”

“We are excit­ed to be part­ner­ing with Search­light on this oppor­tu­ni­ty to acquire Frontier’s oper­a­tions in the North­west,” said Steve Weed, CEO of WDC, and Founder and for­mer CEO of Wave Broad­band. “We have a proven track record of cus­tomer sat­is­fac­tion by pro­vid­ing fast, reli­able inter­net con­nec­tiv­i­ty com­bined with great ser­vice and sup­port. Hav­ing grown up in the North­west, I’m excit­ed to be able to con­tin­ue to serve my com­mu­ni­ty through this new venture.”

“Search­light” is Search­light Cap­i­tal Part­ners, which describes itself as a glob­al pri­vate invest­ment firm with offices in New York, Lon­don and Toron­to. The com­pa­ny lists Elec­tric Light­wave, Rack­space, and Cen­gage Learn­ing as some of its invest­ments. (Elec­tric Light­wave was recent­ly sub­sumed into Allstream.)

“Across the four states, Frontier’s net­work pass­es 1.7 mil­lion res­i­den­tial and busi­ness loca­tions, of which approx­i­mate­ly 500,000 are fiber-to-the-premis­es capa­ble,” Fron­tier’s news release notes, not men­tion­ing that many of those fiber-to-the-premis­es con­nec­tions were cre­at­ed under Ver­i­zon’s ownership.

“As of March 31st, 2019, Fron­tier served approx­i­mate­ly 150,000 fiber broad­band, 150,000 cop­per broad­band and 35,000 video con­nec­tions in these states.”

Wave­Di­vi­sion and Search­light have formed a new com­pa­ny to oper­ate Fron­tier’s North­west divi­sion. Weed says Fron­tier cus­tomers should not expect any changes.

“This announce­ment does not change any­thing for Frontier’s cus­tomers or the employ­ees who sup­port them,” Weed emphasized.

“All ser­vices [will] con­tin­ue with­out dis­rup­tion, all offices [will] remain open, and all con­tracts and rates will con­tin­ue to be honored.”

Reac­tion on DSLRe­ports, a pop­u­lar forum for dis­cussing ISPs, was mixed.

“Free at last!” cheered one com­menter.

“I think it’s a short­sight­ed move,” wrote anoth­er com­menter. “A quick bil­lion for a des­per­ate com­pa­ny. GTE/VZ/Frontier North­west has been a pro­duc­er for their respec­tive com­pa­nies for years. While there’s plen­ty of rur­al cop­per, they have a ful­ly deployed fiber net­work where it counts — sub­ur­ban Port­land and north­ern and east­ern Seat­tle. The demo­graph­i­cal­ly wealth­i­er parts of both of those cities. Enough to sub­si­dize the rur­al cop­per. These states are not like West Vir­ginia or some of the Mid­west lead weights which are pret­ty much a huge cop­per mess.”

“I also would­n’t be sur­prised to see every­thing out­side of Port­land and Seat­tle get sold off again to small inde­pen­dents and coop­er­a­tives in the region,” wrote a third DSLRe­ports com­menter, respond­ing to a remark char­ac­ter­iz­ing the deal as a pri­vate equi­ty play by “vul­tures pick­ing at the scraps of a dying telco.”

“The fiber assets in the Port­land and Seat­tle areas are much more valu­able. This will prob­a­bly look a lot like when GTE sold off Hawaii to the Car­lyle Group back in 2000, who pret­ty much ran it into the ground before sell­ing it off again. (I think there was even a bank­rupt­cy fil­ing back around 2008 or so.) I think Cincin­nati Bell or some sub­sidiary there­of actu­al­ly now owns Hawai­ian Tel­com now. Any­way, mark my words, they are going to sell off these rur­al areas, piece by piece.”

The com­pa­nies did not offer much in the way of details of what Fron­tier cus­tomers can expect after the sale close — if it goes through.

Promis­es that every­thing will be just fine and dandy have been made before… when Fron­tier was the new own­er to be and Ver­i­zon was bailing.

For instance, Fron­tier pro­vides email to its res­i­den­tial cus­tomers and many peo­ple in the Pacif­ic North­west have and use email address­es that end in @frontier.com. Pre­sum­ably, the new com­pa­ny won’t be called Fron­tier. And will it even con­tin­ue to offer an email ser­vice? Or will it do what Ver­i­zon did and exit the email busi­ness entire­ly a few years ago in the mar­kets where it still oper­ates?

Hav­ing to change over to a new email address is a big has­sle. If cur­rent Fron­tier cus­tomers can’t con­tin­ue to use their @frontier.com email address­es after the sale clos­es, that will be very dis­rup­tive. Per­haps an accom­mo­da­tion can be worked out. After all, this time, the pro­posed new own­ers are based here in Wash­ing­ton State and not on the oth­er side of the coun­try in Con­necti­cut. That’s the sil­ver lining.

We’ll keep you post­ed on what reg­u­la­tors have to say about this pro­posed sale. The FCC has to clear the deal and so does the Depart­ment of Jus­tice and state reg­u­la­tors — a process that will take many months, if not longer.