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Frontier: No Changes For FiOS, DirecTV Customers For 9-12 Months

Frontier Communications said there will be no changes in service over the next nine to 12 months for customers of Verizon Communications' FiOS Internet and TV services, as well as DirecTV customers, covered under the $5.3 billion deal with Verizon announced Wednesday.

Frontier is acquiring all of Verizon's local wireline operations in 14 states. The deal encompasses 110,000 FiOS Internet customers, 69,000 FiOS TV subscribers and 164,000 DirecTV customers, according to the companies.

According to Frontier spokesman Steve Crosby, before the deal closes in the next nine to 12 months customers will see no changes to their services. "For the next year, the company will be run by Verizon personnel," he said.

The "current thinking" is to continue offering FiOS TV after the integration with Frontier is complete. Crosby said the telco will evaluate its overall product offerings once that happens.

"They have a partnership with DirecTV, clearly they also have FiOS, and we have a partnership with Dish [Network]," he said. "We'll evaluate all three, and evaluate what's best for the customers to make sure the customers get what they want."

Wachovia Securities broadcast and cable analyst Marci Ryvicker, in a research note Wednesday, suggested the deal could benefit Dish, on the assumption that Frontier will undertake "aggressive marketing" of a synthetic triple-play bundle to former Verizon customers in those 14 states.

The operations Frontier will acquire include all of Verizon's local wireline operating territories in Arizona, Idaho, Illinois, Indiana, Michigan, Nevada, North Carolina, Ohio, Oregon, South Carolina, Washington, West Virginia and Wisconsin. In addition, the transaction will include a small number of Verizon's exchanges in California, including those bordering Arizona, Nevada and Oregon. As of year-end 2008, those operations served approximately 4.8 million local access lines, 2.2 million long-distance customers and 1.0 million high-speed data customers (including the 110,000 FiOS Internet subscribers).

Of those states, Verizon has built out the fiber-to-the-premises FiOS network in Indiana, Oregon, Washington and South Carolina passing approximately 600,000 homes and small businesses.

Verizon has 41 local franchises in Oregon and Washington, as well as a statewide franchise with Indiana. In South Carolina only FiOS Internet is available, not the TV service.

Under the deal, Verizon Business is retaining contracts with its customers in these states and will purchase local exchange services from Frontier in order to serve these customers. Approximately 11,000 Verizon company employees, who primarily support the local phone business that is being acquired, will continue employment with Frontier after the merger.

The deal requires approval from Frontier shareholders, certain regulatory approvals and other customary closing conditions, including Frontier's ability to obtain financing.