Boston, MA 12/19/2013 (wallstreetpr) – AT&T Inc. (NYSE:T), the largest U.S. telecoms operator, announced on Dec. 17, that it was selling its wireline assets in Connecticut state to regional phone company Frontier Communications Corp (NASDAQ:FTR). This did not come as a surprise as T has always repeated its intent to sell its wireline operations. However, investors and subscribers need to understand something here.
The company will receive about $2 billion in cash from the wireline asset sale to Frontier. On its part, Frontier will inherit a rich wireline network complete with subscribers. Besides money and customers changing hands in the deal, workers will also be transferred. T will have about 2,700 employees presently working in its wireline operations in Connecticut join Frontier.
Investors in both companies reacted positively to this news as shares were seen climbing on the side of Frontier and T. However, there was significant rise on the side of Frontier compared to T. Frontier needed this deal to boost its wireline business. This deal is also expected to boost its free cash flow going forward.
On its part, AT&T Inc. (NYSE:T) is expected to used the proceeds from this sale to fund its network upgrade. The company is currently funding an ambitious network upgrade and expansion which is expected to capture the whole of Europe in the coming months. This project requires money and T has been trying to fund it partially through the sale of its non-core assets.
The company recently raised $4.8 billion from the sale of its wireless towers to Crown Castle. The company has sought to assure investors that selling of its Connecticut wireline operations will not affect its profits. It stated that it generates about $1.2 billion annually in revenue from the segment which is less than 1 percent of the revenue it expects to generate this year.
Currently the market values AT&T Inc. (NYSE:T) at $181.53 billion and it has about 5 billion shares outstanding.