Verizon Wraps Deal for XO’s Fiber Business

Verizon Communications said Wednesday that it had closed its acquisition of XO Communications’s fiber-optic network business, wrapping up a $1.8 billion deal announced almost a year ago.

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Verizon noted that the deal will play into its plans to build and deliver next-gen networks, and is expected to provide some critical backhaul capabilities for its 5G deployment.

The XO deal “will add to our fiber footprint and provides us with additional metro rings in 45 out of the top 50 US markets,” Matt Ellis, Verizon’s EVP and CFO, said on the company’s recent Q4 earnings call. “5G wireless technology is a focus for us. We are now launching about 10 pre-commercial pilots across the country with multiple use cases including dense urban and suburban neighborhoods.”

He later noted that “fiber is going to be critical for us” as Verizon densifies its cellular network and preps for 5G.

Verizon said it will immediately get to work on integrating XO’s operations and facilities, and that it expects the deal to deliver north of $1.5 billion in operating and expense savings in net present value.

Tied to the fiber deal with XO, Verizon has struck an agreement to lease certain wireless spectrum from former XO affiliate NextLink Wireless. Verizon also has an option, exercisable under certain circumstances, to buy NextLink.